Hsiangchu Lai

Incentive mechanisms, fairness and participation in online group-buying auctions

The main idea of an online group-buying auction is to recruit enough people to generate a sufficient volume of orders to create the basis for a lower transaction price. Typically, the larger the number of orders, the more consumers will wish to participate. This is because the final auction price is likely to be lower than it would be otherwise. This positive feedback is a demand externalities phenomenon. Nevertheless, there also is a phenomenon of inertia that often occurs at the beginning of online group-buying auctions. Due to the small number of orders that occur in the beginning of an online group-buying auction, many potential participants are inclined to wait until the auction price for the sale item falls to an acceptable level. This only comes through the participation of more people in the auction. As a result, consumers will tend to wait for one another to join the auction. Thus, the startup inertia must be overcome before the number of orders will increase. We explore three incentive mechanisms to address this problem: sequence-based, time-based and quantity-based incentives. We conducted a series of experiments using an online group-buying auction experimental test bed deployed on the Internet to develop deeper insights into how these incentives work in the context of bakery cookie sales. Using theory to represent a variety of decision-making perspectives that can be applied in the online group-buying auction context, we explore whether the different incentive mechanisms cause consumers to perceive a lack of price fairness and procedural fairness in an auctions operations. Our results suggest that consumers view participation discounts as creating the basis for perceptions of greater price fairness in online group-buying auctions. Compared with other incentive mechanisms, a sequence-based incentive mechanism gives consumers a sense of less procedural fairness. Finally, perceptions of fairness tend to have a positive association with price satisfaction and purchase intention.

Consumer adoption of group-buying auctions: an experimental study

Internet-based group-buying auctions enable consumers to obtain volume discounts, but they face risk and trust issues that are not present in other e-retailing formats, which affects their adoption by consumers. Bidders experience uncertainty about the final auction price, and the risk of whether the auction will be completed. We evaluate textual comments and the number of bids made in an auction as drivers of a consumer’s perceived financial and psychological risks toward the group-buying auction mechanism and trust in the auction initiator. We use an Internet-based experimental test bed for online group-buying auctions and will report on one experiment that we conducted. Our results indicate that textual comments made by the participants about sellers in past auctions and existing bids affected a consumer’s perceived trust in the auction initiator and the financial risk of the mechanism. Positive textual comments and more bids appear to enhance perceived trust in the auction initiator and reduce financial risk, and other consumers are more willing to make bids as a result. Consumers continued to express concerns about the uncertainty of the final group-buying auction price though.

A Formal Basis for Negotiation Support System Research

A high-level theoretical model of negotiation activity is introduced as a foundation for guiding future research and development in the area of negotiation support literature. A formal model at this level is presently absent from the negotiation support systems. The model is formally expressed in terms of definitions and postulates that describe eight important negotiation parameters. Relationships between the model and research in game theory, social behavior science, and decision support systems fields are examined.

Negotiation support systems: roots, progress and needs

Abstract. This paper identifies game theories and social behavior science as important roots for negotiation support systems (NSS) research. As these are not typically cited in the NSS literature, summary reviews of them are provided with indications of their relevance to NSS study. On the other hand, neither offers a sufficiently general‐purpose formal model of negotiation that could serve as a backbone for NSS research. A survey of that research is provided, indicating that prugress to date has been somewhat eclectic and devoid of such a model. Our central contention is that a theoretical foundation for NSS study is much needed. Desirable characteristics of a suitable negotiation model are identified as guidance for future research that will aim to devise (and subsequently apply and test) such a model.

Negotiation Support and E-negotiation Systems

With negotiation being an often difficult process involving complex problems, computerbased support has been employed in its various phases and tasks. This chapter provides a historical overview of software used to support negotiations, aid negotiators, and automate one or more negotiation activities. First, it presents several system classifications, architectures and configurations. Then, it focuses on negotiation support systems (NSSs) and related systems introduced in the early 1980s, and on e-negotiation systems (ENSs), which are deployed on the web. These broad categories are discussed from four perspectives: reallife applications, systems used in research and training, research results, and research frameworks.

Implications of Negotiation Theory for Research and Development of Negotiation Support Systems

This paper summarizes a parametric theory of negotiation as a basis forshedding light on negotiation support system possibilities. Previously, thetheory has been used to analyze prior research accomplishments in the area ofnegotiation support systems. Here, we discuss implications of the theory thatare relevant for future research and development of negotiation supportsystems. The implications are concerned with three topics: a high-levelgeneric characterization of these systems, an identification of theirpossible support functions, and a taxonomy for classifying suchsystems.

Electronic Negotiations: Foundations, Systems, and Processes

Electronic negotiations are conflict management and resolution processes conducted on the internet and supported with software. This chapter provides a historical overview of software used in conducting negotiations and aiding negotiators. It recognizes the contributions to the design of negotiation models and systems coming from management science, engineering and management information systems as well as the more recent ones coming from psychology, communication research (see the chapter by Schoop, this volume) and computer science (see the chapter by Sycara and Dai, this volume). Special attention is given to the relationship between the design and engineering of e-negotiation systems and the socio-psychological and anthropological aspects of negotiations that involve people. The discussion on e-negotiation systems and processes is grounded in negotiation process models (see the chapter by Koeszegi and Vetschera, this volume), e-negotiation taxonomy, exchange mechanism design, and protocol theory. The chapter reviews and analyses several e-negotiation systems used in business and academia, including negotiation software platforms used in supply chain systems as well as in research and training.

The Effect of Price Dispersion in an e-Market on Consumers’ Intentions to Join Group Buying

Based on the economics theory of information and the transaction utility theory, this paper shows how the market price dispersion affects a consumer’s intention to join group-buying transactions using the transaction utility, which compares the consumer’s internal reference price and the predicted final price of group buying. The experimental data show that consumers consistently perceive a higher internal reference price as well as a higher predicted final price of group buying in a market with narrow price dispersion. Consumers also perceive a higher transaction utility in a market with narrow price dispersion, except in the best case. Furthermore, the transaction utility in the most-probable case is the highest irrespective of the price dispersion. This is consistent with the transaction utility in the most-probable case being most strongly correlated with the intention to join group buying. Overall, consumers exhibit a higher intention to join group buying in a market with narrow price dispersion, and our results also show that the percentage of subjects joining group buying is much higher in a market with narrow price dispersion than in one with wide price dispersion.

Shaman: Software and Human Agents in Multiattribute Auctions and Negotiations

Three distinct and interacting types of entities: people, software agents and e-markets are considered in this paper. These entities operate within Shaman, a proposed framework for the construction and operation of heterogeneous systems enabling business interactions such as auctions and negotiations between software and human agents across those systems. Shaman is a dss-centric software environment which cooperates with and serves the users of distributed auction and negotiation systems. The dss are used to provide integration and coordination between the participating systems. Four such systems are discussed: Invite e-negotiation platform, enas negotiation agent suite, meet2trade auction platform and GoGo group buying software platform. The Shaman architecture based on these systems and the examples of their interaction enabled by Shaman are discussed.

Decommoditization, Resonance Marketing, and Information Technology: An Empirical Study of Air Travel Services amid Channel Conflict

Digital intermediaries and Internet search technologies have commoditized many products, resulting in intense price competition and channel conflict. Firms use decommoditization strategies to regain control over distribution channels, as well as to implement resonance marketing and hyperdifferentiation, which allows them to improve margins through differentiation. We test two hypotheses: the decommoditization hypothesis and the resonance marketing hypothesis. We use data from an airline with a new à la carte pricing mechanism, which allows consumers to tailor airline ticket bundles to suit their individual preferences. We compare à la carte ticket pricing, whose features can be modified by the purchaser, and fixed (bundled offer) sales, which cannot be modified. We found that a significant number of travelers do use à la carte pricing, which allows the airlines to regain some control over distribution. We find that travelers customized standard bundles when it was possible for them to make à la carte ticket bookings, but mainly for low-feature standard bundles. Frequent-flyer members purchased higher-feature bundles more often when they had the opportunity. The findings support the proposed hypotheses. We discuss the implications for distribution strategy and channel conflict management.