Management Insights, a regular feature of the journal, is a digest of important research in business, management, operations research, and management science. It appears in every issue of the monthly journal.
“Effects of Information-Revelation Policies Under Market-Structure Uncertainty” is by Ashish Arora and Ramayya Krishnan, Carnegie Mellon University; Amy Greenwald, Brown University; and Karthik Kannan, Purdue University.
Electronic B2B marketplaces like www.ariba.com are growing in importance. In third-party electronic marketplaces, sellers face uncertainty about the number of competitors they face in each market session. Since typically the same set of sellers repeatedly compete across market sessions, sellers can alter their bids to learn about their competitors, depending on how the electronic market place is organized, and specifically, how bid information is disclosed.
The authors compare two commonly used setups—one where all bids are disclosed after the bidding round is over, and one where only the winning bid is disclosed. They show that on average the price paid by buyers is higher when only the winning bid is disclosed.
As a result, buyers are better off in markets where all bids are disclosed at the conclusion of the bidding round.-Institute for Operations Research and the Management Sciences
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