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The Chopstick Auction: A Study of the Exposure Problem in Multi-Unit Auctions

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Author Info

  • Sander Onderstal

    (Bureau for Economic Policy Analysis, CPB Netherlands)

  • Florian Englmaier

    (Economics Department, University of Munich)

  • Pablo Guillen

    (Autonoma Barcelona, CSIC)

  • Loreto Llorente

    (Departamento de Economía, Universidad Pública de Navarra)

  • Rupert Sausgruber

    (Department of Public Economics, University of Innsbruck)

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 analyze the chopstick auction with incomplete information 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 slightly less efficient but yields far more revenue than the second-price sealed-bid auction.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.10.

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Date of creation: Jan 2004
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Handle: RePEc:fem:femwpa:2004.10

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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. Emiel Maasland & Sander Onderstal, 2006. "Going, Going, Gone! A Swift Tour of Auction Theory and its Applications," De Economist, Springer, vol. 154(2), pages 197-249, June.
  2. 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.
  3. Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer, vol. 38(1), pages 105-124, January.
  4. Shakun D. Mago & Roman M. Sheremeta, 2012. "Multi-Battle Contests: An Experimental Study," Working Papers 12-06, Chapman University, Economic Science Institute.
  5. 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.

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