Abstract
Winning bids in reverse auctions are efficient solutions (providing that fairly weak assumptions about the bidders are met). The auctions are efficient, under the assumption that the utilities of all participants are quasi-linear. Typically, this assumption is unrealistic. If that is the case, auctions are inefficient mechanisms. This paper outlines the limitations and impracticability of the quasi-linearity assumption and proposes augmenting reverse auctions with negotiations. It shows that when the efficient frontier is concave, then it is possible to improve the winning bid through negotiations that follow auctions.
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Kersten, G.E. (2014). Are Procurement Auctions Good for Society and for Buyers?. In: Zaraté, P., Kersten, G.E., Hernández, J.E. (eds) Group Decision and Negotiation. A Process-Oriented View. GDN 2014. Lecture Notes in Business Information Processing, vol 180. Springer, Cham. https://doi.org/10.1007/978-3-319-07179-4_4
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DOI: https://doi.org/10.1007/978-3-319-07179-4_4
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-07178-7
Online ISBN: 978-3-319-07179-4
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