Secret versus public reserve price in an “outcry” English procurement auction: Experimental results
François Cochard and
Julie Le Gallo ()
International Journal of Production Economics, 2015, vol. 169, issue C, 285-298
In a set of human experiments, we analyze the impact of the buyer׳s reserve price policy in an online open outcry reverse auction. We measure the impact of revealing or not the reserve price on the buyer׳s expected cost when suppliers may be risk-averse. Results confirm that the optimal public reserve price policy dominates for the buyer when the lowest cost supplier is weakly risk-averse but in contrast with theory, the secret reserve price policy does not dominate when he becomes very risk-averse. Analysis of strategic suppliers׳ bidding behavior shows, in conformity with theory, that they react to the secret reserve price and are more aggressive when they are more risk-averse. This explains why the optimal public reserve price does not perform better in this context but is equivalent to the secret one. However, strongly risk-averse bidders are less aggressive than predicted by theory. That is why the secret reserve price policy does not strictly dominate.
Keywords: Experiment; Procurement auction; Public/secret reserve price; Open oral outcry reverse auction (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Secret versus public reserve price in an “outcry” English procurement auction: Experimental results (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:169:y:2015:i:c:p:285-298
Access Statistics for this article
International Journal of Production Economics is currently edited by R. W. GrubbstrÃ¶m
More articles in International Journal of Production Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().