Traders’ Subjective Appraisals: Comparison of Negotiations and Auctions

ABSTRACT

The assessments of business trade often involve economic and relational concerns. They may become more challenging when our understanding of the impacts of trading mechanisms is still limited. The current experimental study compares two generic trading mechanisms, namely, multibilateral multi-issue negotiations and multicriteria auctions. By examining economic measures and subjective appraisals in controlled exchange episodes, the study shows some subtle relationships between mechanism use, substantive outcomes, and subjective appraisals. While use of negotiations versus auctions did not reveal significant differences on economic measures, traders are strongly influenced by the gain-or-loss contingency. When they win a contract, their subjective appraisals are heavily influenced by their achieved substantive outcomes. When they do not win a contract, they feel auctions are better than negotiations. The results confirm the assessments of business trade that rely solely on substantive measures are not sufficient.

Keywords:

• auctions
• electronic markets
• negotiations
• experimental studies

Additional information

Notes on contributors

Bo Yu

Bo Yu is a PhD candidate in the Supply Chain and Business Technology Management Department of the John Molson School of Business at Concordia University, Canada. He received his Masters of Science degree in Management Information Systems from the John Molson School of Business in year 2007. His research interests include technology and operations management, decision making and support, e-commerce, multi-agent systems, and system design.

Gregory E. Kersten

Gregory E. Kersten is a professor and the Senior Concordia Research Chair in Decision and Negotiation Systems in the J. Molson School of Business at the Concordia University. He holds a PhD in Economic Sciences and an MSc degree in Econometrics from the Warsaw School of Economics (Poland). He is a co-author and editor of six books and chapters and numerous journal articles. His research contributions have appeared, among others, in Decision Support Systems; Decision Analysis, Management Science; Electronic Commerce Research and Applications; Electronic Markets; Group Decision and Negotiation; IEEE Expert; IEEE Systems, Man, and Cybernetics; International Journal of Expert Systems, Information and Management; European Journal of Operational Research; Naval Logistic Research; and Theory and Decision. He is a vice-president of the INFORMS Group Decision and Negotiation Section, the senior editor of the Group Decision and Negotiation Journal, associate editor and member of the board of several journals and book series, and a reviewer and assessor for national and international research councils.

Rustam Vahidov

Rustam Vahidov is a professor of Business Technology Management at John Molson School of Business, Concordia University (Montreal, Canada) and holds Royal Bank of Canada Professorship in Interorganizational Governance of IT. He received his PhD from Georgia State University. Dr. Vahidov has published papers in a variety of journals, including Journal of Management Information Systems, Decision Support Systems, Information and Management, Expert Systems with Applications, Group Decision and Negotiation, Fuzzy Sets and Systems, among others.