Bidding on Price and Quality: An Experiment on the Complexity of Scoring Rule Auctions
| Authors | |
|---|---|
| Year of publication | 2024 |
| Type | Article in Periodical |
| Magazine / Source | The Review of Economics and Statistics |
| MU Faculty or unit | |
| Citation | |
| Web | https://direct.mit.edu/rest/article-abstract/doi/10.1162/rest_a_01288/114759/Bidding-on-Price-and-Quality-An-Experiment-on-the?redirectedFrom=fulltext |
| Doi | http://dx.doi.org/10.1162/rest_a_01288 |
| Keywords | laboratory experiment; procurement auctions; scoring rule auctions; multiattribute auctions; complexity |
| Description | We experimentally study procurement auctions when both quality and price matter. We compare two treatments where sellers compete on one dimension only (price or quality), with three treatments where sellers submit a price-quality bid and the winner is determined by a scoring rule that combines the two offers. We find that, in the scoring rule treatments, efficiency and buyer's utility are lower than predicted. Estimates from a Quantal Response Equilibrium model suggest that increasing the dimension of the strategy space imposes a complexity burden on sellers, so that a simpler mechanism like a quality-only auction may be preferable. |