INFORMATION SHARING AND PRICE DYNAMICS IN B2B DIGITAL SYSTEMS

While multiple studies have investigated the digital ecosystems in the B2C sectors, empirical research on the upstream of the supply chain is still underexplored. This paper examines the case when a digital platform is incorporated into the century-old auction systems. This work offers insights into B2B markets and at the same time, an interesting instance where different pricing mechanisms (online posted price and auctions) co-exit. We investigate how the information of the new digital posted price channel can influence buyers’ learning behaviors and consequently, the price dynamics in the auction market. Our empirical analysis reveals that multiple information signals can play a role. While sellers’ high price and high-volume sales signals can partially dimmish the existing declining price trend in the sequential auctions where the prices from the earlier auction rounds tend to be higher than from the latter, this information effect does not persist over time. These results highlight the potential benefit of cooperating e-commerce with an auction channel for sellers and the shift in buyers’ behaviors in responding to an additional platform in a B2B market

Information Transparency in Multi-Channel B2B Auctions: A Field Experiment

With the large amount of data available via different channels, firms have increasingly viewed information transparency as an important component of their strategy. This paper examines how the disclosure of winners\u27 information affects sellers\u27 revenues in multi-channel, B2B sequential auctions. Using a field experiment, we find that bidders tend to pay higher prices when winners\u27 identities are concealed from public view. At the outset, such finding contradicts the prediction of the well-known linkage principle in auction theory. Our empirical analysis suggests that anonymizing winning bids might discourage tacit collusion and mitigate the declining price trend in these B2B sequential auctions. This paper contributes to the growing literature on information transparency in market design. It also provides valuable insights to practitioners in designing information revelation policies in complex B2B markets

Information Transparency in B2B Auction Markets: The Role of Winner Identity Disclosure

We study the impact of information transparency in B2B auctions. Specifically, we measure the effect of concealing winners’ identities on auction outcomes using a large-scale, quasi-natural field experiment. Contrary to the conventional wisdom that “the more information, the better,” we find that concealing winners’ identities leads to a significant increase in price by approximately 6%, and such effect holds true across both online and offline channels as well as different types of bidders. We further explore the mechanism that drives the observed effect. The empirical analysis suggests that the price increase may primarily stem from the disruption of imitative bidding which relies on the identification of fellow competitors. Our findings have important implications for the design of auction markets, especially multi-channel B2B markets

Modeling On-Line Art Auction Dynamics Using Functional Data Analysis

In this paper, we examine the price dynamics of on-line art auctions of modern Indian art using functional data analysis. The purpose here is not just to understand what determines the final prices of art objects, but also the price movement during the entire auction. We identify several factors, such as artist characteristics (established or emerging artist; prior sales history), art characteristics (size; painting medium--canvas or paper), competition characteristics (current number of bidders; current number of bids) and auction design characteristics (opening bid; position of the lot in the auction), that explain the dynamics of price movement in an on-line art auction. We find that the effects on price vary over the duration of the auction, with some of these effects being stronger at the beginning of the auction (such as the opening bid and historical prices realized). In some cases, the rate of change in prices (velocity) increases at the end of the auction (for canvas paintings and paintings by established artists). Our analysis suggests that the opening bid is positively related to on-line auction price levels of art at the beginning of the auction, but its effect declines toward the end of the auction. The order in which the lots appear in an art auction is negatively related to the current price level, with this relationship decreasing toward the end of the auction. This implies that lots that appear earlier have higher current prices during the early part of the auction, but that effect diminishes by the end of the auction. Established artists show a positive relationship with the price level at the beginning of the auction. Reputation or popularity of the artists and their investment potential as assessed by previous history of sales are positively related to the price levels at the beginning of the auction. The medium (canvas or paper) of the painting does not show any relationship with art auction price levels, but the size of the painting is negatively related to the current price during the early part of the auction. Important implications for auction design are drawn from the analysis.Comment: Published at http://dx.doi.org/10.1214/088342306000000196 in the Statistical Science (http://www.imstat.org/sts/) by the Institute of Mathematical Statistics (http://www.imstat.org

Designing Intelligent Software Agents for B2B Sequential Dutch Auctions: A Structural Econometric Approach

We study multi-unit sequential Dutch auctions in a complex B2B context. Using a large real-world dataset, we apply structural econometric analysis to recover the parameters governing the distribution of bidders’ valuations. The identification of these parameters allows us to simulate auction results under different designs and perform policy counterfactuals. We also develop a dynamic optimization approach to guide the setting of key auction parameters. Given the bounded rationality of human decision makers, we propose to augment auctioneers’ capabilities with high performance decision support tools in the form of software agents. Our paper contributes to both theory and practice of auction design. From the theoretical perspective, this is the first study that explicitly models the sequential aspects of Dutch auctions using structural econometric analysis. From the managerial perspective, this paper offers useful implications to business practitioners for complex decision making in B2B auctions

Online Auctions

The economic literature on online auctions is rapidly growing because of the enormous amount of freely available field data. Moreover, numerous innovations in auction-design features on platforms such as eBay have created excellent research opportunities. In this article, we survey the theoretical, empirical, and experimental research on bidder strategies (including the timing of bids and winner's-curse effects) and seller strategies (including reserve-price policies and the use of buy-now options) in online auctions, as well as some of the literature dealing with online-auction design (including stopping rules and multi-object pricing rules).

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

Last minute travel: Anomaly or opportunity? A case study of an online travel agency’s product evolution

According to Jupiter Research, Online Travel is expected to reach $128 billion by the year 2011. It is estimated that sales of online packages will reach$7.6 billion by 2011; with one segment of this market, last minute travel, estimated to reach $1.8 billion during the same period. The growth potential of the last minute market segment is substantial, as the number of consumers who purchase travel online will grow from 34 million in 2005 to 55 million in 2011 (Cannizzaro, Carrol, Offutt, and Quinby, 2007)

Information technology, contract and knowledge in the networked economy: a biography of packaged software for contract management

In this research I investigate the intersection of information and communication technology (ICT), contract and knowledge in the networked economy as illuminated by the “life” of contract management software (CMS). The failure of CMS to fulfill market expectations provides the motivating question for this study. Based on interview, survey and archival data, I construct a “biography” of CMS from a market perspective informed by the theory of commoditization as well as studies of markets from economic sociology. From the latter, I draw upon the theory of performativity in markets to identify in the failure of CMS a series of breakdowns in performative assumptions and operations normally at work in the making of a packaged software market, ranging from a failure in classification performativity to a detachment of marketized criteria, in the form of analyst ratings, from the underlying software product and vendors. This catalog of breakdown indicates that packaged software production implicates multiple levels of commoditization, including financialized meta-commodities and marketized criteria, in a dynamic I theorize as substitution of performance. I explore the implications of my findings for packaged software and for process commodities more generally, suggesting, inter alia, that process commoditization may revolve around contract and information exchange rather than product definition. I go on to propose an open theorization of contract as a technology of connectedness, in a relationship of potential convergence, complementarity and substitution with ICT, interpenetrating and performative. My contributions are to information systems and organizations research on the topics of packaged software and the relationship of ICT, contract and organizational knowledge; and to economic sociology on the topics of performativity in markets and product qualification in process commoditization