Dissertations, Theses, and Capstone Projects

Date of Degree

2-2015

Document Type

Dissertation

Degree Name

Ph.D.

Program

Business

Advisor

Karl R. Lang

Subject Categories

Business | Databases and Information Systems | Economics

Keywords

Communication, Economics, Social Buying, Social Networks

Abstract

Coordination, and the mechanisms by which coordination occurs, represents a significant area of study for economic research, and information technology. Technology enhances communication in both speed and quantity of information and when aligned with appropriate tasks can improve decision-making and task performance. Examining the effect of technology based coordination mechanisms on market platforms provides insight into outcomes as represented by buyer surplus and task completion as well as behaviors, such as network structure and emotional attitudes in economic experiments. Drawing on theory from economics and information systems, larger buyer groups should be able to obtain better prices and extract higher surplus from sellers, and in the presence of higher levels of communication, buyers should be better able to coordinate their actions, yielding higher surpluses as predicted by countervailing power theory. However, increased communication, while allowing for more collaboration, requires increased coordination. Thus, while larger groups should get better outcomes the complexity of forming groups proves challenging. The increased levels of communication create "noise" which hinders the time it takes to complete tasks thereby suppressing buyer profits. Galbraith (1952) explained that increased cooperation among buyers would lower prices, but that these lower prices were found in the establishment of intermediaries, through countervailing power theory. However, individual consumers could never exercise this power, because coordination and communication costs were too high.

This dissertation tests countervailing power theory under a specific economic market, group buying suited for interdependent tasks. An experimental simulation is created that tests the effects of different levels of communication and group size, and examines the results of buyer surplus and time to task completion as well as their interaction effects. The experiment also examines the structural nature of the group-buying network and analyzes the rich qualitative data for insight into the role of emotions in group buying. The results could be used to further design additional experimental simulations to tests these classic economic theories while provide insight into the design of electronic markets.

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