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The chopstick auction: A study of the exposure problem in multi-unit auctions

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  • Englmaier, Florian
  • Guillén, Pablo
  • Llorente, Loreto
  • Onderstal, Sander
  • Sausgruber, Rupert

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].

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 27 (2009)
Issue (Month): 2 (March)
Pages: 286-291

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Handle: RePEc:eee:indorg:v:27:y:2009:i:2:p:286-291

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Chopstick auction Exposure problem Laboratory experiment Second-price sealed-bid auction;

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References

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Citations

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Cited by:
  1. Steven Tucker & Charles Noussair & Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multiunit Auctions," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 461-490, 07.
  2. Sandro Brusco & Giuseppe Lopomo, 2005. "Simultaneous Ascending Auctions with Complementarities and Known Budget Constraints," Department of Economics Working Papers 05-13, Stony Brook University, Department of Economics.
  3. Emiel Maasland & Sander Onderstal, 2006. "Going, Going, Gone! A Swift Tour of Auction Theory and Its Applications," De Economist, Springer, vol. 154(3), pages 481-481, September.
  4. Sandro Brusco & Giuseppe Lopomo & Leslie M. Marx, 2008. "The `Google Effect' in the FCC's 700 MHz Auction," Department of Economics Working Papers 08-03, Stony Brook University, Department of Economics.
  5. Shakun D. Mago & Roman M. Sheremeta, 2012. "Multi-Battle Contests: An Experimental Study," Working Papers 12-06, Chapman University, Economic Science Institute.

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