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Title:The chopstick auction: a study of the exposure problem in multi-unit auctions PDF Logo
Authors:Englmaier, Florian
Guillén, Pablo
Llorente, Loreto
Onderstal, Sander
Sausgruber, Rupert
Issue Date:2006
Series/Report no.:CESifo working paper 1782
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].
JEL:C9
D44
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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