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The multidimensional procurement auctions with reference‐based utility
Author(s) -
Chen Zhe
Publication year - 2021
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3237
Subject(s) - common value auction , procurement , computer science , microeconomics , combinatorial auction , operations research , business , economics , marketing , mathematics
In this paper, we modify standard multidimensional procurement auction models by the assumption of reference‐based utility. We analyze how the reference‐based utility of a buyer affects the outcomes of multidimensional procurement auctions. Furthermore, we also investigate the optimal reference‐based utility of a buyer and demonstrate that the multidimensional procurement auctions with reference‐based utility dominate several other commonly used procedures for buying differentiated products. Our results extend the standard analysis of multidimensional procurement auctions (e.g., Che, 1993; Asker & Cantillon, 2008) to more economically reasonable cases.