ICES Brown Bag for November 30

Events, Seminars | November 20, 2017

Join us for the next ICES Brown Bag Lecture of the semester, featuring Weiwei Zheng.

Ms. Zheng, of George Mason University, will discuss her paper (co-authored with Daniel Houser and Jason Shachat) Gift Exchange in Alternative Procurement Mechanisms (Abstract). The talk will take place on Thursday, November 30th, from 12:00 to 1:00pm, in room 5075 of the Vernon Smith Hall (formerly Metropolitan Building), Arlington campus.

Coffee and dessert will be provided.

Please visit the Brown Bag Schedule to learn more about the Brown Bag series.


Reputation system and repeated strategic interactions are considered the main restraints on the pervasive moral hazard leaded by incomplete contract in procurement. We argue that gift-exchange and reciprocity is another force that limits moral hazard. Gift-exchange and reciprocity was identified as the key principle of labor contracts that employees provide productivity higher than necessary in return of employer’s paying wage higher than required, and it was confirmed in laboratory experiments that rules out effect of reputation and repeated game. We test the presence and relative strength of this gift exchange hypothesis in a stylized procurement setting under alternative auction mechanisms. Our result confirms the hypothesis and indicates that buyer-determined auction leads to higher level of gift exchange and a stronger price-quality relationship than the one-sided double auction where buyers offer prices, and also generates higher buyer and supplier surpluses.

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