Note on Online Auctions with Costly Bid Evaluation

Scott M. Carr ()
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Scott M. Carr: The Anderson School of Management at UCLA, Los Angeles, California 90095-1481

Management Science, 2003, vol. 49, issue 11, 1521-1528

Abstract: As seen in the data of Snir and Hitt (2003), online service procurement auctions often end without achieving a contract despite active bidding, yet the existing auction literature is silent on why this occurs. One explanation for these unconsummated auctions may be that perfectly acceptable bids are submitted but disregarded because of the cost of assessing the bids' viability and the bidders' capabilities. This note examines this possibility by characterizing optimal and equilibrium bidding and bid-evaluation decisions in the presence of these costs.

Keywords: Internet; Electronic Market; Software Contracts; Reverse Auctions; Bidding; Evaluation Cost (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:49:y:2003:i:11:p:1521-1528

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