{"title":"采购互动中的或有支付:实验证据","authors":"Jason Shachat , Matthew J. Walker , Lijia Wei","doi":"10.1016/j.euroecorev.2024.104886","DOIUrl":null,"url":null,"abstract":"<div><div>A primary objective of creating competition among suppliers is the procurement of higher quality goods and services at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. Thus, payments to suppliers cannot be perfectly conditioned on the quality provided. We develop a simple model to distil several real-world features and illustrate how contract structure within price priority competition jointly affects bid aggression and incentives for the provision of surplus-enhancing quality. We implement the contingent payments as probabilistic. The selected supplier’s payment is, according to a fixed probability, either their bid or a quality contingent amount that depends on the bid and an exogenous norm for allocating social surplus. We use a lab experiment to show that there is a ‘Goldilocks’ region for high quality in which the probability of quality contingent payment is large enough to incentivize provision, but not so large as to induce overly aggressive bidding. This implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. An experimental finding not predicted in our setting is that suppliers earn positive economic profits inside the Goldilocks region, which can be explained by suppliers’ risk aversion. The results have implications for the effective design of contingent payments in contracts.</div></div>","PeriodicalId":48389,"journal":{"name":"European Economic Review","volume":"170 ","pages":"Article 104886"},"PeriodicalIF":2.8000,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":"{\"title\":\"Contingent payments in procurement interactions: Experimental evidence\",\"authors\":\"Jason Shachat , Matthew J. Walker , Lijia Wei\",\"doi\":\"10.1016/j.euroecorev.2024.104886\",\"DOIUrl\":null,\"url\":null,\"abstract\":\"<div><div>A primary objective of creating competition among suppliers is the procurement of higher quality goods and services at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. Thus, payments to suppliers cannot be perfectly conditioned on the quality provided. We develop a simple model to distil several real-world features and illustrate how contract structure within price priority competition jointly affects bid aggression and incentives for the provision of surplus-enhancing quality. We implement the contingent payments as probabilistic. The selected supplier’s payment is, according to a fixed probability, either their bid or a quality contingent amount that depends on the bid and an exogenous norm for allocating social surplus. We use a lab experiment to show that there is a ‘Goldilocks’ region for high quality in which the probability of quality contingent payment is large enough to incentivize provision, but not so large as to induce overly aggressive bidding. This implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. An experimental finding not predicted in our setting is that suppliers earn positive economic profits inside the Goldilocks region, which can be explained by suppliers’ risk aversion. The results have implications for the effective design of contingent payments in contracts.</div></div>\",\"PeriodicalId\":48389,\"journal\":{\"name\":\"European Economic Review\",\"volume\":\"170 \",\"pages\":\"Article 104886\"},\"PeriodicalIF\":2.8000,\"publicationDate\":\"2024-11-01\",\"publicationTypes\":\"Journal Article\",\"fieldsOfStudy\":null,\"isOpenAccess\":false,\"openAccessPdf\":\"\",\"citationCount\":\"0\",\"resultStr\":null,\"platform\":\"Semanticscholar\",\"paperid\":null,\"PeriodicalName\":\"European Economic Review\",\"FirstCategoryId\":\"96\",\"ListUrlMain\":\"https://www.sciencedirect.com/science/article/pii/S0014292124002150\",\"RegionNum\":2,\"RegionCategory\":\"经济学\",\"ArticlePicture\":[],\"TitleCN\":null,\"AbstractTextCN\":null,\"PMCID\":null,\"EPubDate\":\"\",\"PubModel\":\"\",\"JCR\":\"Q1\",\"JCRName\":\"ECONOMICS\",\"Score\":null,\"Total\":0}","platform":"Semanticscholar","paperid":null,"PeriodicalName":"European Economic Review","FirstCategoryId":"96","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0014292124002150","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"ECONOMICS","Score":null,"Total":0}
Contingent payments in procurement interactions: Experimental evidence
A primary objective of creating competition among suppliers is the procurement of higher quality goods and services at lower prices. When procuring non-standard goods, it is often difficult to write a complete specification of desired quality in the contract. Thus, payments to suppliers cannot be perfectly conditioned on the quality provided. We develop a simple model to distil several real-world features and illustrate how contract structure within price priority competition jointly affects bid aggression and incentives for the provision of surplus-enhancing quality. We implement the contingent payments as probabilistic. The selected supplier’s payment is, according to a fixed probability, either their bid or a quality contingent amount that depends on the bid and an exogenous norm for allocating social surplus. We use a lab experiment to show that there is a ‘Goldilocks’ region for high quality in which the probability of quality contingent payment is large enough to incentivize provision, but not so large as to induce overly aggressive bidding. This implementation only relies upon preferences for maximizing one’s own profit and the rationality of backward induction. An experimental finding not predicted in our setting is that suppliers earn positive economic profits inside the Goldilocks region, which can be explained by suppliers’ risk aversion. The results have implications for the effective design of contingent payments in contracts.
期刊介绍:
The European Economic Review (EER) started publishing in 1969 as the first research journal specifically aiming to contribute to the development and application of economics as a science in Europe. As a broad-based professional and international journal, the EER welcomes submissions of applied and theoretical research papers in all fields of economics. The aim of the EER is to contribute to the development of the science of economics and its applications, as well as to improve communication between academic researchers, teachers and policy makers across the European continent and beyond.