Information Architecture and Electronic Market Performance

textabstractElectronic 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.