Negotiation and Auction Mechanisms in E-procurement : Systems and Experiments

Auctions and negotiations are mechanisms used in market exchanges. Behavioral economics experiments focused on the mechanism efficiency which required highly simplified problems and contexts. This paper discusses an on-going project involving an experimental comparison of auction and negotiation mechanisms embedded in software which we have developed. The experiments are situated in an e-business context which resembles real-life e-procurement. Both reverse multi-attribute auctions and multi-bilateral negotiations are used in a transportation service procurement scenario. The potential contribution includes the verification of theoretical claims that auctions are more profitable for auction givers than negotiations. It also includes the formulation of guidelines for appropriate design of multiattribute market mechanisms and their selection.

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