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

F. Englmaier, P. Guillén, L. Llorente, A.M. Onderstal, R. Sausgruber

Research output: Contribution to journalArticleScientificpeer-review

5 Citations (Scopus)

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].
Original languageEnglish
Pages (from-to)286-291
JournalInternational Journal of Industrial Organization
Volume27
Issue number2
Publication statusPublished - 2009

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