The service provider’s dilemma: Applying two behavioural economic theories to CRE purchasing

Jeff Lessard

Corporate Real Estate Journal, 2017, vol. 6, issue 3, 220-226

Abstract: A better understanding of two important ideas in the discipline of behavioural economics can help corporate real estate executives improve decision making and secure better outcomes for their companies. This paper first reviews the Prisoner’s Dilemma experiment, exploring the value paradox of procurement-led buying processes. The paper then reviews the Winner’s Curse phenomenon, highlighting how such procurement-led processes can actually lead to suboptimal outcomes for purchasers. The paper closes with suggested ways to improve the purchasing process and the decision making of suppliers and purchasers.

Keywords: behavioural economics; prisoner’s dilemma; winner’s curse; procurement; corporate real estate; vendor management; service provider management; cost savings (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:aza:crej00:y:2017:v:6:i:3:p:220-226

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