Incentive mechanisms,fairness and participation in online group-buying auctions |
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| Affiliation: | 1. School of Business, National Sun Yat-sen University, Kaohsiung, Taiwan, ROC;2. WP Carey Chair in Information Systems, WP Carey School of Business, Arizona State University, Tempe, AZ 85287, USA;1. Universitat de Girona, Av. Lluis Santalo, S/N Campus Montilivi, Edifici P-4, E-17071 Girona, Spain;2. Newronia, Parc Científic i Tecnològic, Edifici Narcís Monturiol, c/Emili Grahit, 91, E-17003 Girona, Spain;1. School of Information Management, Wuhan University, China;2. Industrial Engineering and Management, Ming Chi University of Technology, Taiwan;1. Department of Information Science & Management Systems, National Taitung University, 369, Sec. 2, University Rd., Taitung 95092, Taiwan;2. College of Management, National Sun Yat-Sen University, 70 Lienhai Rd., Kaohsiung 80424, Taiwan;3. School of Management, Xiamen University, Baoxinliying Building 361005, Xiamen University, China;4. Department of Business Administration, Meiho University, 23, Pingguang Rd., Neipu, Pingtung 91202, Taiwan;1. School of Management, University of Science and Technology of China, Hefei, China;2. School of Business, East China University of Science and Technology, Shanghai, China; Research Center for Virtual Business, East China University of Science and Technology, Shanghai, China;3. Department of Information Systems, City University of Hong Kong, Hong Kong, China;4. School of Management, Zhejiang University, Hangzhou, China |
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| Abstract: | The main idea of an online group-buying auction is to recruit enough people to generate a sufficient volume of orders to create the basis for a lower transaction price. Typically, the larger the number of orders, the more consumers will wish to participate. This is because the final auction price is likely to be lower than it would be otherwise. This positive feedback is a demand externalities phenomenon. Nevertheless, there also is a phenomenon of inertia that often occurs at the beginning of online group-buying auctions. Due to the small number of orders that occur in the beginning of an online group-buying auction, many potential participants are inclined to wait until the auction price for the sale item falls to an acceptable level. This only comes through the participation of more people in the auction. As a result, consumers will tend to wait for one another to join the auction. Thus, the startup inertia must be overcome before the number of orders will increase. We explore three incentive mechanisms to address this problem: sequence-based, time-based and quantity-based incentives. We conducted a series of experiments using an online group-buying auction experimental test bed deployed on the Internet to develop deeper insights into how these incentives work in the context of bakery cookie sales. Using theory to represent a variety of decision-making perspectives that can be applied in the online group-buying auction context, we explore whether the different incentive mechanisms cause consumers to perceive a lack of price fairness and procedural fairness in an auction’s operations. Our results suggest that consumers view participation discounts as creating the basis for perceptions of greater price fairness in online group-buying auctions. Compared with other incentive mechanisms, a sequence-based incentive mechanism gives consumers a sense of less procedural fairness. Finally, perceptions of fairness tend to have a positive association with price satisfaction and purchase intention. |
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