Abstract: The profits allocation and conditions of building the cooperative relationship between buyer and supplier with risk reverse in multi-attribute reverse auctions are explored in this paper. Non-cooperative and the cooperative game models are constructed to analyze the risk attitudes of both sides how to impact the result of profits allocation, attain the conditions to build the cooperative relationship and determine the optimal ratio of profits allocation. Combined with the simulation experiment, it is concluded that the factors affecting both sides' non-cooperative profits include the supplier's cost parameters and the number of bidders. The ratio of the cooperative profits allocation is affected by the coefficients of risk aversion for both parties. The subsidy that the buyer provides to the supplier is affected by the parties' coefficients of risk aversion and their bargaining power. The basic conditions of establishing cooperative relationship include collective rationality and individual rationality, which are captured by the information sharing between both sides and the incremental profits allocation. Finally, the necessary condition of maintaining and developing a long-term cooperative relationship is an optimal distribution ratio, which maximizes utility for both sides.

Key words: risk aversion, reverse auction, profits allocation, buyer-supplier relationship