31.01.2017 - 23:07
Guest Lecture by Lijia Tan
Reserve Prices versus Renegotiation in Procurement Auctions: An experimental comparison | Tue, Jan. 31, 2017, 14–16 h | Room SG 183, Geibelstr. 41, 47057 Duisburg
We provide the first direct experimental comparison of auctioneer behaviour in English auctions with a reserve price and the English auctions with renegotiation, two popular methods of procurement. In our experiment, the auctioneer in these two mechanisms have systematic bias to deviate the theoretical prediction. We find that a transformed probability model ideally indicates where the deviations in the two mechanisms come from. Auctioneer's choose reserve prices consistent with maximization of a utility with transformed conditional probability of executing reserve prices, while they choose take-it-or-leave offers as though they distort Bayesian posterior probabilities of executing offers. To test the robustness of our model, especially, by considering of an alternative behavioural model with anticipated regrets, we then show in a subsequent experiment that the auctioneer's expected benefit is well estimated by transformed probability model rather than the other in an environment in which the distribution of seller's cost is right skewed.
Lijia Tan is a postdoctoral researcher at the University of Cologne. She received a Ph.D. in Economics and earned a M.A. degree in Finance from Xiamen University in China, where she stayed seven years. Her research interests include Experimental Economics, Behavioral Operation Management, and Game Theory. Her main research focus is the relationship between buyer and seller in procurement, including prosocial behaviour and negotiation protocols which could contribute to the efficiency of a supply chain; auctioneer’s systematic bias in optimal auction mechanism as well as laboratorial investigation for the efficiency of the practical auction formats. Her works have been published in Management Science and Pacific Economic Review.