Reverse auctions outperform quotes in procuring goods with quality differences
Dynamic auctions are commonly used in e-procurement to buy goods of different qualities. Traditional requests for quotes involve sealed bids, while reverse auctions have suppliers submit quality first and then compete in an auction to set prices. The buyer selects the seller with the best quality-price difference. A study compared the two methods using game theory and experiments, finding that reverse auctions are more effective for procuring goods with quality differences.