Publication details

Bidding on Price and Quality: An Experiment on the Complexity of Scoring Rule Auctions

Authors

CAMBONI Riccardo CORAZZINI Luca GALAVOTTI Stefano VALBONESI Paola

Year of publication 2024
Type Article in Periodical
Magazine / Source REVIEW OF ECONOMICS AND STATISTICS
MU Faculty or unit

Faculty of Economics and Administration

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.

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