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Englmaier, Florian; Guillén, Pablo; Llorente, Loretoe; Onderstal, Sander; 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

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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.

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