We experimentally study procurement auctions when both quality and price matter. We compare two treatments where sellers compete on one dimension only (price or quality), with three treatments where sellers submit a price-quality bid and the winner is determined by a scoring rule that combines the two offers. We find that, in the scoring rule treatments, efficiency and buyer’s utility are lower than predicted. Estimates from a Quantal Response Equilibrium model suggest that increasing the dimension of the strategy space imposes a complexity burden on sellers, so that a simpler mechanism like a quality-only auction may be preferable.

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Author notes

We are especially grateful to Shachar Kariv and three anonymous Referees for their comments that substantially improved the article. We thank Patrick Bajari, Maria Bigoni, Alessandro Bucciol, Uri Gneezy, Ben Greiner, Marco Guerzoni, Elisabetta Iossa, Gregory Lewis, Antonio Nicoló, Salvatore Nunnari, Fausto Pacicco, Giancarlo Spagnolo, Steve Tadelis, Orestis Troumpounis, Luigi Vena, Andrea Venegoni, Claudio Zoli, participants at the AMEC in St. Petersburg, the European ESA Meeting in Dijion, the ESA World Meeting in Vancouver, the SIOE Conference in Stockholm, and participants at the seminars in Padova and Verona for useful discussions and comments. We are grateful to Joachim Vosgerau for the opportunity to run the experiment at BELSS, Bocconi University, Milan. Iuliana Iuras and Marco Magnani provided excellent research assistance during the experiment. Financial support was provided by Centro Studi di Economia e Tecnica dell’Energia Giorgio Levi Cases, University of Padova, Italy (Project No. BERT_EPPR_P14_01); by the PRIN 2017Y5PJ43, funded by the Italian Ministry of Education; and by the Progetto di Eccellenza Fondazione Cariparo 2017, Unipd. The Ethical Committee of the Department of Economics, University of Venice “Ca’ Foscari,” approved the experimental protocol. All errors are ours.

A supplemental appendix is available online at https://doi.org/10.1162/rest_a_01288.

© 2023 The President and Fellows of Harvard College and the Massachusetts Institute of Technology. Published under a Creative Commons Attribution 4.0 International (CC BY 4.0) license.
2023
The President and Fellows of Harvard College and the Massachusetts Institute of Technology. Published under a Creative Commons Attribution 4.0 International (CC BY 4.0) license.
This is an open-access article distributed under the terms of the Creative Commons Attribution 4.0 International License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. For a full description of the license, please visit https://creativecommons.org/licenses/by/4.0/legalcode

Supplementary data

Supplemental Appendix
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