Empirical Design of Incentive Mechanisms in Group-Buying Auctions: Chapter 8

• Main Authors: DOONG, Her-Sen, KAUFFMAN, Robert J., LAI, Hsiangchu, ZHUANG, Ya-Ting
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2009
• Subjects: Auction markets; group-buying auctions; incentive mechanisms; price curve effects; procurement; Information technology; Economic aspects; Electronic commerce; Computer Sciences; Management Information Systems; Sales and Merchandising
• Online Access: https://ink.library.smu.edu.sg/sis_research/2836; https://worldcat.org/isbn/9780765615329
• Institution: Singapore Management University

Experimental methodologies offer a unique lens through which to examine the dynamics of bidding behavior and consumer perceptions of the efficacy of mechanism design in group-buying auctions. Group-buying auctions permit participating consumers to leverage their numbers to achieve discounted prices for purchase. We examine three incentive mechanisms for group-buying with the goal of understanding which provide the greatest perceived value for participants, especially how the incentive mechanisms impact the participants' planned behavior and perceived value. They include time-based incentives, quantity-based incentives, and sequence-based incentives. We also examine the role of planned order sizes versus final order sizes across the models. To obtain our results. we developed an experimental test bed that permits group-buying supply procurement buyers to participate in specially developed auctions that implement the different incentive mechanisms. The empirical methods that we demonstrate suggest the efficacy of incremental refinements in the experimental design as a means for developing deeper insights into group-buying incentive mechanism design. We conclude with a discussion of the experimental methods as a means for studying a variety of mechanism design issues in the context of a larger family of group-buying mechanisms.