The chopstick auction

Englmaier, Florian; Guillén, Pablo; Llorente, Loretoe; Onderstal, Sander und Sausgruber, Rupert (2009): The chopstick auction. A study of the exposure problem in multi-unit auctions. In: International Journal of Industrial Organization, Vol. 27, No. 2: pp. 286-291

Abstract

Multi-unit auctions are sometimes plagued by the so-called exposure problem. In this paper, we analyze a simple game called the "chopstick auction" in which bidders are confronted with the exposure problem. We do so both in theory and in a laboratory experiment. In theory, the chopstick auction has an efficient equilibrium and is revenue equivalent with the second-price sealed-bid auction in which the exposure problem is not present. In the experiment, however, we find that the chopstick auction is less efficient than the second-price sealed-bid auction and that it yields more the same revenue if bidders are inexperienced experienced. © 2008 Elsevier B.V. All rights reserved.

• Item Type: Journal article
• Form of publication: Publisher's Version
• Keywords: Costs; Experiments; Game theory; Industrial economics; Programming theory, Chopstick auction; Exposure problem; Laboratory experiment; Multi-unit auctions; Second-price sealed-bid auction; Simple games, Commerce
• Faculties: Economics; Economics > Chairs > Seminar for Organizational Economics
• Subjects: 300 Social sciences > 330 Economics
• ISSN: 0167-7187
• Language: English