Logo
Munich Personal RePEc Archive

Procuring Commodities: Request for Quote or Reverse Auctions?

Shachat, Jason (2009): Procuring Commodities: Request for Quote or Reverse Auctions?

Warning
There is a more recent version of this item available.
[thumbnail of MPRA_paper_13418.pdf]
Preview
PDF
MPRA_paper_13418.pdf

Download (315kB) | Preview

Abstract

We examine the relative performances of reverse auctions and request for quotes in a simple commodity environment. Enterprises embarking on a reverse auction initiative often start with their commodity purchases. We conduct laboratory experiments and find that this is a poor starting point. Both the mean and variance of prices when sourcing through reverse auctions. With respect to the general investigation of auctions, the request for quote is the mirror image of a first price sealed bid auction and has the same symmetric Nash equilibrium. However, the request for quote allows identification of simple behavioral rules such as always bidding a percentage of your signal, which is indistinct from Nash equilibrium strategies in the sell auction counterpart. Consequently we estimate that one-fourth of the subjects follow a simple mark-up rule and approximately two-thirds follow a strategic Nash equilibrium strategy.

Available Versions of this Item

Atom RSS 1.0 RSS 2.0

Contact us: mpra@ub.uni-muenchen.de

This repository has been built using EPrints software.

MPRA is a RePEc service hosted by Logo of the University Library LMU Munich.