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

30 Pages Posted: 27 Feb 2004

See all articles by Sander Onderstal

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Florian Englmaier

Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Rupert Sausgruber

Vienna University of Economics and Business - Department of Economics

Loreto Llorente

University of Navarra - School of Economics

Pablo Guillen

Harvard Business School; Autonomous University of Barcelona - Faculty of Economics and Business Studies

Multiple version iconThere are 2 versions of this paper

Date Written: January 2004

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.

Keywords: Chopstick auction, Exposure problem, Laboratory experiment, Second-price

JEL Classification: C9, D44

Suggested Citation

Onderstal, Sander and Englmaier, Florian and Sausgruber, Rupert and Llorente, Loreto and Guillen, Pablo, The Chopstick Auction: A Study of the Exposure Problem in Multi-Unit Auctions (January 2004). FEEM Working Paper No. 10.2004. Available at SSRN: https://ssrn.com/abstract=501422 or http://dx.doi.org/10.2139/ssrn.501422

Sander Onderstal (Contact Author)

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Florian Englmaier

Department of Economics ( email )

Ludwigstrasse 28
Munich, D-80539
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Rupert Sausgruber

Vienna University of Economics and Business - Department of Economics ( email )

Welthandelsplatz 1
Vienna, 1020
Austria
+43 1 31336 4572 (Phone)

Loreto Llorente

University of Navarra - School of Economics ( email )

Universidad de Navarra
Campus Universitario
Pamplona, 31009
Spain

Pablo Guillen

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-495-6753 (Phone)

Autonomous University of Barcelona - Faculty of Economics and Business Studies ( email )

Campus Bellaterra
Barcelona, 08193
Spain

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