Electronic Multidimensional Auctions and the Role of Information Feedback

Traditionally, companies aiming to achieve competition among suppliers have used sealed bidding procedures in their sourcing processes. The advances in information technology and in particular the Internet now allow these companies to use different and more complex auction mechanisms. In particular multidimensional auctions are a natural extension of the standard sealed-bid auctions, but these auctions raise a whole host of issues that have been little investigated. In this article we focus on one of these issues, namely the role of information feedback given during the auction process. We describe various feedback policies and analyze the expected impact on the performance of the auction mechanism using the criteria of speed of convergence, allocative efficiency and Pareto optimality. This can help both researchers and practitioners in a more detailed and thorough analysis of electronic auctions

DETERMINANTS OF REVERSE AUCTION RESULTS: AN EMPIRICAL EXAMINATION OF FREELANCER.COM

In recent years, auction mechanisms have been widely implemented in online platforms, leading to the advent of reverse auctions sites on which people can offer small- and medium-sized projects such as craft or information technology (IT) projects. These sites are especially interesting for freelancers who can bid for a particular project. The principal offering the project can make a decision based on the bid amount as well as on other information available about the freelancers. In this paper, we derive factors from transaction cost theory that explain the decision of a principal besides the bid amount. Based on an empirical analysis of bidding information extracted from Freelancer.com, we found that the bid amount has the highest effect on the decision of the principal followed by the number of reviews the freelancer has already received and the number of already conducted transactions between a freelancer and a principal. We also found that principals prefer freelancers who live in the same cultural area. Furthermore our results indicate that a gold membership has no effect on the decision of the principal which is of interest especially for those freelancers who believe they are considered to be more reliable as a gold member

Design and Evaluation of Feedback Schemes for Multiattribute Procurement Auctions

Multiattribute auctions, which allow bids on multiple dimensions of the product, are IT-enabled sourcing mechanisms that increase the efficiency of procurement for configurable goods and services compared to price-only auctions. Given the strategic nature of procurement auctions, the amount of information concerning the buyer’s preferences that is disclosed to the suppliers has implications on the profits of the buyer and suppliers and, consequently, on the long-term relationship between them. This study develops novel feedback schemes for multiattribute auctions that protect buyer’s preference information from the supplier and suppliers’ cost schedule from the buyer. We conduct a laboratory experiment to study bidder behavior and profit implications under three different feedback regimes. Our results indicate that bidders are able to extract more profit with more information regarding the state of the auction in terms of provisional allocation and prices. Furthermore, bidding behavior is substantially influenced by the nature and type of feedback

The Roles of Corporate IT Infastructure and their Impact on IS Effectiveness

In the strategic alignment model of Henderson and Venkatraman (1993) [1] IT infrastructure has an important but only implicitly defined role. According to evolving literature, IT infrastructure serves many different purposes in large companies. We outline the main missions (roles) of the corporate-wide IT infrastructure and its contribution to IS effectiveness and study the relationship of IT infrastructure with alignment processes and strategic integration. Our empirical tests with data from almost one hundred large companies resulted in three IT infrastructure roles, which reflect the IS communality, strategic, and flexibility dimensions of the corporate-wide IT infrastructure. The roles were not symmetrically related to the IS effectiveness and alignment perspectives. IT infrastructure roles had a significant interplay with strategic integration in improving IS effectiveness. However, the interplay of IT infrastructure roles with alignment perspectives had only marginal effects. Implications of the results for research and practice are discussed

Procurement Auctions and Negotiations: An Empirical Comparison

This is an Accepted Manuscript of an article published by Taylor & Francis Group in Journal of Organizational Computing and Electronic Commerce on Aug. 2, 2017, available online: http://www.tandfonline.com/10.1080/10919392.2017.1363576.Real world procurement transactions often involve multiple attributes and multiple vendors. Successful procurement involves vendor selection through appropriate market mechanisms. The advancement of information technologies has enabled different mechanisms to be applied to similar procurement situations. Advantages and disadvantages of using such mechanisms remain unclear. The presented research compares two types of mechanisms: multi-attribute reverse auctions and multi-attribute multi-bilateral negotiations in e-procurement. Both laboratory and online experiments were carried out to examine their effects on the process, outcomes and suppliers’ assessment. The results show that in procurement, reverse auctions were more efficient than negotiations in terms of the process. Auctions also led to greater gains for the buyers than negotiations but the suppliers’ profit was lower in auctions. The buyer and the winning supplier jointly reached more efficient and balanced contracts in negotiations than in auctions. The results also show that the suppliers’ assessment was affected by their outcomes: the winning suppliers had a more positive assessment towards the process, outcomes and the system. The findings are consistent in both the laboratory and online settings. The implications of this study for practitioners and researchers are discussed

Information Architecture and Electronic Market Performance

Electronic markets are one of the most prominent business applications of the Internet, so determining the factors that drive their performance is of great value. This thesis shows that an important driver of electronic market performance is the information architecture of the market, which describes what type of information is available to whom during the market process. Two studies of electronic market initiatives at a large Dutch flower auction highlight how information and communication technology (ICT) affects the information architecture of the market and the consequences for market behavior. ICT not only affects existing markets, but also offers opportunities to design innovative new market mechanisms. One of these is a multidimensional auction, in which bidders bid not only on price, but also on dimensions such as quality and delivery time. The effects of different information architectures of multidimensional auctions are explored in laboratory experiments. The findings of the three studies are synthesized into a theory of electronic markets that has important implications for market designers, traders and researchers.Otto Koppius studied Applied Mathematics at the University of Twente in the Netherlands, with a major in graph theory. During his studies, he spent several months at the University of South Australia, working on a project involving the optimal layout of mineshafts. In June 1997, he received his M.Sc. degree for a thesis on the novel graph-theoretic problem of finding degree-preserving spanning trees, which arose from an application in water distribution networks. In September 1997, he took up a position as Ph.D. student at the department of Decision and Information Sciences at the Rotterdam School of Management, Erasmus University. In 1998, he was one of the recipients of a grant from the Carnegie Bosch Institute at Carnegie-Mellon University, for a project on electronic sourcing strategy. The same year, his dissertation proposal on electronic multidimensional auctions was runner-up in the contest for "Best E-Commerce Thesis Proposal", organized by IBM Research's Institute for Advanced Commerce. The following year, he spent three months as a visiting researcher at the University of Michigan, as well as three months at the IBM T.J. Watson Research Center. He was invited to the doctoral consortia of the International Conference on Information Systems in 1999 and the Academy of Management in 2000 and he has presented his work at various other conferences, including INFORMS, the Workshop on Information Systems and Economics, the Hawaii International Conference on Systems Sciences, the European Conference on Information Systems, the Sunbelt Social Network Analysis conference and the Strategic Management Society. He is currently an assistant professor at the department of Decision and Information Sciences at the Rotterdam School of Management, Erasmus University. As a result of his research on electronic markets, his research interests branch out into areas within strategic management, entrepreneurship, behavioral decision theory and social network analysis

Three Studies on Multi-attribute Market Mechanisms in E-procurement

Successful e-procurement depends on selecting the appropriate mechanisms that comprise rules governing and facilitating transaction process. Existing mechanisms have theoretical or practical limitations such as limited number of attributes, disclosure of buyer’s preferences and costly processes. The present research addresses these issues through three studies. Study 1 presents two feasible mechanisms for multi-attribute multi-supplier transactions. They allow buyers to control preference representation and information revelation, assuring that suppliers obtain sufficient information in making effective proposals while protecting confidential information. Following the design-science approach, the mechanisms are implemented to support multi-attribute reverse auctions and multi-bilateral negotiations. Study 2 examines the revelation of information in multi-attribute reverse auctions. Three revelation rules are formulated with admissible bids, winning bids and all bidders’ bids. Their effects on the process, outcomes and bidders’ assessment are tested in two experiments. The results show significant improvement in process efficiency when more information is revealed. The suppliers reached better outcomes with either admissible bids only or all bidders’ bids, while the buyers gained more when revealing the winning bids only. Bidders were more satisfied with the outcomes and system when more information was provided. Study 3 compares multi-attribute reverse auctions and multi-bilateral negotiations in both laboratory and online experiments. The results show that auctions are more efficient than negotiations in terms of the process. Auctions led to greater gains for the buyers, whereas more balanced contracts were reached in negotiations. Suppliers’ assessment was affected by their outcomes, and the winning suppliers were more satisfied with the process, outcomes and system. The buyer’s role was also examined. Different types of information conveyed from buyer influence suppliers’ behavior in making bids/offers and concessions, which in turn affected buyer’s gains. This research provides implications to future studies and practices in e-procurement, in particular, the formulation of a procedure of two multi-attribute mechanisms and the formulation of general guidelines for strategic use of different mechanisms in various e-procurement contexts