Preference Revelation in Multi-Attribute Reverse English Auctions: A Laboratory Study

The effects of preference revelation on allocational and Pareto efficiency are studied in a multi-attribute reverse English auction. Multi-attribute reverse auctions have been proposed as market institutions for electronic request for quotation buying processes. Preference revelation is a crucial question in multi-attribute reverse auctions in terms of the efficiency of auction outcomes. Results from a computer-based laboratory experiment are reported and auction outcomes are analyzed regarding the buyer’s and suppliers’ surplus, efficiency, and Pareto efficiency. The results show that suppliers make more profits when preferences are revealed, but not at the expense of the buyer, and that full revelation of the buyer’s preferences significantly increases allocational and Pareto efficiency.

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