The Screening Role of Design Parameters for Service Procurement Auctions in Online Service Outsourcing platforms

• 成果类型: Article
• 署名作者: Liang, Chen; Hong, Yili; Chen, Pei-Yu; Shao, Benjamin B. M.
• 署名单位: University of Connecticut; University of Miami; Arizona State University; Arizona State University-Tempe
• 刊物名称: INFORMATION SYSTEMS RESEARCH
• ISSN/ISSBN: 1047-7047
• DOI: 10.1287/isre.2022.1168
• 发表日期: 2022
• 页码: 1324-1343
• 关键词: Reputation; internet; MARKETS; MODEL; COMPETITION; strategies; DYNAMICS; price; CONSEQUENCES; preferences

摘要

This paper provides a novel theoretical angle and robust empirical evidence demonstrating that the auction duration and item description length are two essential auction design parameters that can function as a screening mechanism for bidder quality on online service outsourcing platforms. These outsourcing platforms use buyer-determined reverse auctions to find providers of services (primarily IT services). Using data from a major online outsourcing platform that connects buyers with bidders, we examine the effects of the auctionduration and the itemdescription length on both bidder entry (i.e., the number of bids and bidder quality) and contract outcomes (i.e., whether a project is contracted and the buyer's expected utility fromthe winning bid) based upon not only project-level, but also bidder-level analyses. Our results show that auctions with longer durations and item descriptions attract more bids (i.e., higher quantity of bidders), and they also attract disproportionately more bidders with lower completion rates (i.e., lower quality of bidders), creating a double whammy of higher evaluation costs and adverse selection for buyers. This, in turn, leads to contracting inefficiency in terms of less successful contracting as well as lower buyer utility. Our research shows strong support for the screening role of the auction duration and the item description length for buyers on online outsourcing platforms for service procurement: by shortening auction durations and item descriptions, buyers can expect higher quality bidders, increase contracting probability, and enhance utility.