Traders’ Subjective Appraisals: Comparison of Negotiations and Auctions

ABSTRACT The assessments of business trade often involve economic and relational concerns. They may become more challenging when our understanding of the impacts of trading mechanisms is still limited. The current experimental study compares two generic trading mechanisms, namely, multibilateral multi-issue negotiations and multicriteria auctions. By examining economic measures and subjective appraisals in controlled exchange episodes, the study shows some subtle relationships between mechanism use, substantive outcomes, and subjective appraisals. While use of negotiations versus auctions did not reveal significant differences on economic measures, traders are strongly influenced by the gain-or-loss contingency. When they win a contract, their subjective appraisals are heavily influenced by their achieved substantive outcomes. When they do not win a contract, they feel auctions are better than negotiations. The results confirm the assessments of business trade that rely solely on substantive measures are not sufficient.

[1]  Lukas Furst,et al.  Multivariate Data Analysis With Readings , 2016 .

[2]  R. B. Woodruff,et al.  Modeling Consumer Satisfaction Processes Using Experience-Based Norms: , 1983 .

[3]  Fred D. Davis,et al.  User Perceptions of Decision Support Effectiveness: Two Production Planning Experiments * , 1994 .

[4]  Bart J. Wilson,et al.  A Comparison of Auctions and Multilateral Negotiations , 2002 .

[5]  P. Bentler,et al.  Cutoff criteria for fit indexes in covariance structure analysis : Conventional criteria versus new alternatives , 1999 .

[6]  T. Raykov Estimation of Composite Reliability for Congeneric Measures , 1997 .

[7]  Robert B. Handfield,et al.  WHAT SOURCING CHANNEL IS RIGHT FOR YOU , 2003 .

[8]  J. Kagel,et al.  Auctions: A Survey of Experimental Research, 1995 - 2008* , 2008 .

[9]  Christof Weinhardt,et al.  The Montreal Taxonomy for Electronic Negotiations , 2003 .

[10]  F. Burstein,et al.  Handbook on Decision Support Systems 1 , 2008 .

[11]  Paul R. Milgrom,et al.  A theory of auctions and competitive bidding , 1982 .

[12]  Dale Goodhue,et al.  Is Attitudes: toward Theoretical and Definition Clarity , 1986, ICIS.

[13]  Youjae Yi A Critical review of consumer satisfaction , 1989 .

[14]  R. MacCallum,et al.  Power analysis and determination of sample size for covariance structure modeling. , 1996 .

[15]  Rolph E. Anderson,et al.  Multivariate data analysis with readings (2nd ed.) , 1986 .

[16]  Stephen J. Andriole,et al.  Handbook of Decision Support Systems , 1989 .

[17]  L. Thompson Negotiation behavior and outcomes: Empirical evidence and theoretical issues. , 1990 .

[18]  Ajay S. Vinze,et al.  Empirical Verification of Effectiveness for a Knowledge-Based System , 1992, Int. J. Man Mach. Stud..

[19]  Daniel R. Vincent,et al.  Optimal Procurement Mechanisms , 1995 .

[20]  R. Oliver,et al.  Assessing the Dimensionality and Structure of the Consumption Experience: Evaluation, Feeling, and Satisfaction , 1993 .

[21]  Arvind Rangaswamy,et al.  Using Computers to Realize Joint Gains in Negotiations: Toward an , 1997 .

[22]  E. van Heck,et al.  Choosing between Auctions and Negotiations in Online B2b Markets for it Services: The Effect of Prior Relationships and Performance , 2008 .

[23]  David F. Pyke,et al.  Sourcing Strategy and Supplier Relationships : Alliances vs . eProcurement April 8 , 2002 , 2002 .

[24]  Beth H. Jones,et al.  Impact of Communication Medium and Computer Support on Group Perceptions and Performance: A Comparison of Face-to-Face and Dispersed Meetings , 1993, MIS Q..

[25]  Wynne W. Chin,et al.  Research Report: Better Theory Through Measurement-Developing a Scale to Capture Consensus on Appropriation , 2002, Inf. Syst. Res..

[26]  Vernon L. Smith Markets, Institutions and Experiments , 2006 .

[27]  Auction versus Negotiation in Public Procurement: Looking forward New Empirical Evidence , 2009 .

[28]  Stefan Strecker Multiattribute Auctions in Electronic Procurement – Theory and Experiment – , 2004 .

[29]  R. Oliver,et al.  Outcome Satisfaction in Negotiation: A Test of Expectancy Disconfirmation , 1994 .

[30]  Craig R. Carter,et al.  Deciding on the Mode of Negotiation: To Auction or Not to Auction Electronically , 2004 .

[31]  C. Distefano,et al.  Understanding and Using Factor Scores: Considerations for the Applied Researcher , 2009 .

[32]  B. Frey,et al.  What Can Economists Learn from Happiness Research? , 2001, SSRN Electronic Journal.

[33]  Wynne W. Chin,et al.  Advancing the Theory of Adaptive Structuration: The Development of a Scale to Measure Faithfulness of Appropriation , 1997, Inf. Syst. Res..

[34]  H. Håkansson International Marketing and Purchasing of Industrial Goods: An Interaction Approach , 1982 .

[35]  Detmar W. Straub,et al.  Validation Guidelines for IS Positivist Research , 2004, Commun. Assoc. Inf. Syst..

[36]  9. Auctions A Survey of Experimental Research , 2016 .

[37]  Egil Kjerstad,et al.  Auctions vs negotiations: a study of price differentials. , 2005, Health economics.

[38]  Hillary Anger Elfenbein,et al.  What Do People Value When They Negotiate? Mapping the Domain of Subjective Value in Negotiation , 2006, Journal of personality and social psychology.

[39]  René Kirkegaard,et al.  Auctions Versus Negotiations Revisited , 2002 .

[40]  Laurie R. Weingart,et al.  Interdependence, social motives, and outcome satisfaction in multiparty negotiation , 2000 .

[41]  Robin M. Hogarth,et al.  Judgment and decision research: Some historical context. , 1997 .

[42]  Mercedes Vellez Auctions Versus Negotiations: Evidence from Public Procurement in the Italian Healthcare Sector , 2011 .

[43]  Bart J. Wilson,et al.  Verifiable Offers and the Relationship between Auctions and Multilateral Negotiations , 2005 .

[44]  P. Pintrich,et al.  An Achievement Goal Theory Perspective on Issues in Motivation Terminology, Theory, and Research. , 2000, Contemporary educational psychology.

[45]  Karee E. Dunn,et al.  A Critical Review of Research on Formative Assessment: The Limited Scientific Evidence of the Impact of Formative Assessment in Education , 2009 .

[46]  Jeremy I. Bulow,et al.  Auctions versus Negotiations , 1996 .

[47]  G. J. Asmundson,et al.  Exploratory and confirmatory factor analytic investigations of the Illness Attitudes Scale in a nonclinical sample. , 1999, Behaviour research and therapy.

[48]  M. Schweitzer,et al.  What Makes Negotiators Happy? The Differential Effects of Internal and External Social Comparisons on Negotiator Satisfaction , 2004 .

[49]  P. Bentler,et al.  Significance Tests and Goodness of Fit in the Analysis of Covariance Structures , 1980 .

[50]  Ephraim R. McLean,et al.  Information Systems Success: The Quest for the Dependent Variable , 1992, Inf. Syst. Res..

[51]  Auction versus Negotiation in Public Procurement: Looking for Empirical Evidence , 2014 .

[52]  Gregory E. Kersten,et al.  Are All E-Commerce Negotiations Auctions? , 2000, COOP.

[53]  Kent L. Norman,et al.  Development of an instrument measuring user satisfaction of the human-computer interface , 1988, CHI '88.

[54]  D. Hamermesh Association Lecture Subjective Outcomes in Economics , 2004 .

[55]  Eric J. Johnson,et al.  Mindful judgment and decision making. , 2009, Annual review of psychology.

[56]  S. Fournier,et al.  Rediscovering Satisfaction , 1999 .

[57]  Sammy W. Pearson,et al.  Development of a Tool for Measuring and Analyzing Computer User Satisfaction , 1983 .

[58]  Andrea Bonaccorsi,et al.  Auctions vs. Bargaining: An Empirical Analysis of Medical Device Procurement , 2000 .

[59]  Richard A. Spreng,et al.  A Reexamination of the Determinants of Consumer Satisfaction , 1996 .

[60]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[61]  I. Benbasat,et al.  The Effects of Group, Task,Context, and Technology Variables on the Usefulness of Group Support Systems , 1993 .

[62]  David L. Olson,et al.  Multiple Criteria Decision Making Models in Group Decision Support , 1993 .

[63]  A. D. Smith Perception and Belief , 2001 .

[64]  Joseph A. Cote,et al.  Multicollinearity and Measurement Error in Structural Equation Models: Implications for Theory Testing , 2004 .

[65]  Richard P. Bagozzi,et al.  Assessing Construct Validity in Organizational Research , 1991 .