| Open or Sealed Bids in Buyer-Determined Auctions? Evidence from Online Labor Markets |
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| Online labor markets recently emerged as a novel avenue for companies to identify and hire IT labor. These markets provide platforms facilitating Buyer-Determined (BD) auctions. In this paper, we study the effect of two BD auction designs-open bids and sealed bids-on bidder behavior and market performance. We first theoretically analyze equilibrium bidder entry and surplus, and derive our hypotheses on the comparison of the two auction designs in terms of entry barrier and market performance. Using a proprietary dataset based on 1,816,886 bids from 106,147 open bids and 9,950 sealed bids auctions posted on Freelancer.com by 41,530 unique buyers, we found open bids to consistently outperform sealed bids BD auctions in terms of buyer surplus, contract rate, and buyer satisfaction. We attribute performance differences to the "screening effect" that filters out low quality bidders in open bids auctions. We discuss implications for auction design and online labor markets. |
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Paul A. Pavlou is the Milton F. Stauffer Professor of Information Technology and Strategy at the Fox School of Business at Temple University. He is also the Fox School's Chief Research Officer and Associate Dean of Research, Doctoral Programs, and Strategic Initiatives.
Paul received his Ph.D. from the University of Southern California in 2004. Paul was ranked first in the world in publications in the two top MIS journals (MISQ and ISR) for 2010-2012. His work has been cited over 10,000 times by Google Scholar and over 3,000 times by the Social Science Citation Index (SSCI) of the Institute of Scientific Information (ISI).
His research appeared in MIS Quarterly (MISQ), Information Systems Research (ISR), Journal of Marketing (JM), Journal of Management Information Systems (JMIS), Journal of the Association of Information Systems (JAIS), Journal of the Academy of Marketing Science (JAMS), and Decision Sciences, among others. His research focuses on e-commerce strategy, digital business strategy, and development of research methods. Paul won several Best Paper awards for his research, including the ISR Best Paper award in 2007, the 2006 IS Publication of the Year award, the Top 5 Papers award in Decision Sciences in 2006, the Runner-Up to the Best Paper award of the 2005 Academy of Management Conference, the Best Doctoral Dissertation award of the 2004 International Conference on Information Systems (ICIS), the Best Interactive Paper award of the 2002 Academy of Management Conference, and the Best Student Paper award and Best Paper Award of the Academy of Management Conference (OCIS Division) in 2001 and 2012, respectively.
Paul also won several Reviewer awards, including the 2009 Management Science Meritorious service award, the 'Best Reviewer' award of the 2005 Academy of Management Conference, and the 2003 MISQ 'Reviewer of the Year' award.
Paul is a Senior Editor at MISQ and JAIS. He is also a guest Senior Editor of a Special Issue of MISQ on "Digital Business Strategy." Earlier he served as a guest Senior Editor of a Special Issue of MISQ titled "Novel Perspectives of Trust in Information Systems" that was published in June of 2010, and also as a guest Senior Editor of a Special Issue of JMIS on 'Trust in Online Environments' published in 2008.
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