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Better, Faster, Cheaper: An Experimental Analysis of a Multiattribute Reverse Auction Mechanism with Restricted Information Feedback

Authors:

Ching-Hua Chen-Ritzo,

Terry P. Harrison,

Anthony M. Kwasnica,

Douglas J. ThomasAuthors Info & Claims

Management Science, Volume 51, Issue 12

Pages 1753 - 1762

https://doi.org/10.1287/mnsc.1050.0433

Published: 01 December 2005 Publication History

Abstract

The majority of reverse auctions for procurement use a single-attribute (price) format while providing constraints on nonprice attributes such as quality and lead time. Alternatively, a buyer could choose to conduct a multiattribute auction where bidders can specify both a price and levels of nonprice attributes. While such an auction may provide higher theoretical utility to the buyer, it is not clear that this theoretical improvement will be realized given the increased complexity of the auction. In this research, we present an ascending auction mechanism for a buyer whose utility function is known and dependent on three attributes. Motivated by a supply chain procurement problem setting, we consider quality and lead time for the two attributes in addition to price. The auction mechanism provides the bidders with restricted feedback regarding the buyer's utility function. We explore, experimentally, the performance of this multiattribute auction mechanism as compared to a price-only auction mechanism. Compared with the price-only auction, we find that our mechanism design is effective in increasing both buyer utility and bidder (supplier) profits.

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Cited By

Chen CBailey M(2018)Game-Introduction to Reverse AuctionsINFORMS Transactions on Education10.1287/ited.2017.018018:2(116-126)Online publication date: 1-Jan-2018
https://dl.acm.org/doi/10.1287/ited.2017.0180
Altun Kvon Zedtwitz MDereli T(2016)Multi-issue negotiation in quality function deploymentComputers and Industrial Engineering10.1016/j.cie.2015.11.01792:C(31-49)Online publication date: 1-Feb-2016
https://dl.acm.org/doi/10.1016/j.cie.2015.11.017
Kersten G(2014)Multiattribute Procurement AuctionsDecision Analysis10.5555/2827755.282775611:4(215-232)Online publication date: 1-Dec-2014
https://dl.acm.org/doi/10.5555/2827755.2827756
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Better, Faster, Cheaper: An Experimental Analysis of a Multiattribute Reverse Auction Mechanism with Restricted Information Feedback

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Published In

cover image Management Science

Management Science Volume 51, Issue 12

December 2005

170 pages

ISSN:0025-1909

Issue’s Table of Contents

Publisher

INFORMS

Linthicum, MD, United States

Publication History

Published: 01 December 2005

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Cited By

Chen CBailey M(2018)Game-Introduction to Reverse AuctionsINFORMS Transactions on Education10.1287/ited.2017.018018:2(116-126)Online publication date: 1-Jan-2018
https://dl.acm.org/doi/10.1287/ited.2017.0180
Altun Kvon Zedtwitz MDereli T(2016)Multi-issue negotiation in quality function deploymentComputers and Industrial Engineering10.1016/j.cie.2015.11.01792:C(31-49)Online publication date: 1-Feb-2016
https://dl.acm.org/doi/10.1016/j.cie.2015.11.017
Kersten G(2014)Multiattribute Procurement AuctionsDecision Analysis10.5555/2827755.282775611:4(215-232)Online publication date: 1-Dec-2014
https://dl.acm.org/doi/10.5555/2827755.2827756
(2014)An Empirical Analysis of Price, Quality, and Incumbency in Procurement AuctionsManufacturing & Service Operations Management10.1287/msom.2014.048516:3(346-364)Online publication date: 1-Jul-2014
https://dl.acm.org/doi/10.1287/msom.2014.0485
Wu SKersten GYang CGefen DFenske DWeber BClemons EDai QWang HWattal SCheng SCapitano J(2014)Multi-attribute Procurement Auctions and NegotiationsProceedings of the Sixteenth International Conference on Electronic Commerce10.1145/2617848.2617859(72-79)Online publication date: 5-Aug-2014
https://dl.acm.org/doi/10.1145/2617848.2617859
Altun KDereli TBaykasoğLu A(2013)Development of a framework for customer co-creation in NPD through multi-issue negotiation with issue trade-offsExpert Systems with Applications: An International Journal10.1016/j.eswa.2012.05.04340:3(873-880)Online publication date: 1-Feb-2013
https://dl.acm.org/doi/10.1016/j.eswa.2012.05.043
Adomavicius GGupta ASanyal P(2012)Effect of Information Feedback on the Outcomes and Dynamics of Multisourcing Multiattribute Procurement AuctionsJournal of Management Information Systems10.2753/MIS0742-122228040828:4(199-230)Online publication date: 1-Apr-2012
https://dl.acm.org/doi/10.2753/MIS0742-1222280408
Singh RBenyoucef L(2012)Fuzzy Logic and Interval Arithmetic-Based TOPSIS Method for Multicriteria Reverse AuctionsService Science10.1287/serv.1120.00094:2(101-117)Online publication date: 1-Jun-2012
https://dl.acm.org/doi/10.1287/serv.1120.0009
Elmaghraby WKatok ESantamaría N(2012)A Laboratory Investigation of Rank Feedback in Procurement AuctionsManufacturing & Service Operations Management10.1287/msom.1110.035414:1(128-144)Online publication date: 1-Jan-2012
https://dl.acm.org/doi/10.1287/msom.1110.0354
Wan ZBeil DKatok E(2012)When Does It Pay to Delay Supplier Qualification? Theory and ExperimentsManagement Science10.1287/mnsc.1120.153958:11(2057-2075)Online publication date: 1-Nov-2012
https://dl.acm.org/doi/10.1287/mnsc.1120.1539
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