Bidding on Price and Quality: An Experiment on the Complexity of Scoring Rule Auctions
| Authors | |
|---|---|
| Year of publication | 2023 |
| Type | Article in Periodical |
| Magazine / Source | The Review of Economics and Statistics |
| MU Faculty or unit | |
| Citation | |
| Doi | http://dx.doi.org/10.1162/rest_a_01288 |
| 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. |