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

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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Experiments
Auctions
Multi-unit auctions
Revenue
Sealed-bid auction
Experiment
Laboratory experiments
Simple game

Cite this

Englmaier, F., Guillén, P., Llorente, L., Onderstal, A. M., & Sausgruber, R. (2009). The Chopstick auction: A study of the exposure problem in multi-unit auctions. International Journal of Industrial Organization, 27(2), 286-291.
Englmaier, F. ; Guillén, P. ; Llorente, L. ; Onderstal, A.M. ; Sausgruber, R. / The Chopstick auction : A study of the exposure problem in multi-unit auctions. In: International Journal of Industrial Organization. 2009 ; Vol. 27, No. 2. pp. 286-291.
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Englmaier, F, Guillén, P, Llorente, L, Onderstal, AM & Sausgruber, R 2009, 'The Chopstick auction: A study of the exposure problem in multi-unit auctions', International Journal of Industrial Organization, vol. 27, no. 2, pp. 286-291.

The Chopstick auction : A study of the exposure problem in multi-unit auctions. / Englmaier, F.; Guillén, P.; Llorente, L.; Onderstal, A.M.; Sausgruber, R.

In: International Journal of Industrial Organization, Vol. 27, No. 2, 2009, p. 286-291.

Research output: Contribution to journalArticleScientificpeer-review

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T1 - The Chopstick auction

T2 - A study of the exposure problem in multi-unit auctions

AU - Englmaier, F.

AU - Guillén, P.

AU - Llorente, L.

AU - Onderstal, A.M.

AU - Sausgruber, R.

N1 - Appeared earlier as CentER DP 2002-35 (revised title)

PY - 2009

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AB - 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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JO - International Journal of Industrial Organization

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Englmaier F, Guillén P, Llorente L, Onderstal AM, Sausgruber R. The Chopstick auction: A study of the exposure problem in multi-unit auctions. International Journal of Industrial Organization. 2009;27(2):286-291.