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 InterNeg Research Centre
 Suite MB-014-264
 1450 Guy Street
 Montreal, Quebec H3H 0A1
 Tel: (514) 848-2424-2799

Negotiation OR Auction


Bo Yu, Rustam Vahidov and Gregory Kersten (Concordia University, Canada)


Negotiations and auctions are two key types of market mechanisms that are frequently used to allocate goods dynamically. They have a critical influence on both the sellers and buyers who conduct transactions. However, there is a lack of a theoretical foundation about the mechanism selection and what impact the use of various mechanisms will have on both individual and organizational users.

The aim of the project is to build a comprehensive research framework and knowledge base from multiple discipline perspectives, through continuous and accumulative work. The research under this project would bring valuable knowledge and support to businesses, helping them to make better decisions in transactions, especially in cyberspace, whereby the appropriate selection of mechanisms, use of technologies, and design of electronic market systems would further increase social welfare and better satisfy agents with the transaction process if possible.


  • Developing a theoretical framework. Traditionally, auctions were solely studied from an economic perspective. Negotiations were studied a little broadly in some disciplines, such as economy and management. In order to better understand both the social and individual impacts of market mechanisms, however, the traditional approaches are seriously constrained. A theoretical foundation being able to synthesize multiple disciplines seems necessary. The potential disciplines include economics, behavioral science, psychology, information system (IS) research, strategy, computer science, organization theories etc. We intend to develop a cohesive framework cutting across the models and constructs in these disciplines. The framework will serve as a core model to conduct subsequent empirical work in comparing auctions and negotiations. The framework will also provide us with important insights into the ways organizations and individuals adopt and use different forms of electronic markets.
  • System design. Various forms of auctions and negotiations assessed in the experiments will require the development of a unified protocol, which should take into account the nature of the mechanism, task, and context. Such a protocol should make it possible to compare various exchange models and be adaptable to different settings (localized vs. distributed, synchronous vs. asynchronous) and tasks.
  • Experiment design. Basing on the derived framework and the protocol for experiments we will develop statistical hypotheses and plan a series of experiments designed to test the model. Specifically, we will test the impacts of varying contextual variables, mechanisms, tasks, and system features on the adoption of auctions or negotiations. This will require preparation of cases from profiled businesses using various exchange mechanisms and the development of instruments.
  • Experiments. Participating subjects will perform the assigned experimental exchange tasks relating to different firm profiles, strategies or resources, in interaction with each other via electronic exchange software.


  • Bulow, J. and P. Klemperer (1996). Auctions Versus Negotiations. American Economic Review, 86(1): 180-194.
  • Manelli, A. M. and D. R. Vincent (1995). Optimal Procurement Mechanisms. Econometrica, 63(3): 591-620.
  • Kirkegaard, R. E. (2004). Auctions Versus Negotiations Revisited
  • Leffler, K. B., R. R. Rucker, et al. (2003). The Choice Among Sales Procedures: Auction vs. Negotiationed Sales of Private Timber.
  • Bajari, P., R. McMillan, et al. (2003). Auctions versus Negotiations in Procurement: An Empirical Analysis. SIEPR Discussion Papers, No. 02-41.
  • Thomas, C. J. and B. J. Wilson (2002). A comparison of auctions and multilateral negotiations. The Rand Journal of Economics, 33(1): 140-155.
  • Thomas, C. J. and B. J. Wilson (2004). Verifiable Offers and the Relationship Between Auctions and Multilateral Negotiations.
  • Limburg, L., D. Rolli, et al. (2005). Foundations of an experimental study for comparing auctions and negotiations in electronic Procurement. GDN 2005 Conference.
  • Ivanova-Stenzel, R. and S. Kroger (2005). Behavior in Combined Mechanisms: Auctions with a Pre-Negotiation Stage. An Experimental Investigation

  August 22, 2019
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