Trading Places: An Experimental Comparison of Reallocation Mechanisms for Priority Queuing

Anouar El Haji and Sander Onderstal
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Anouar El Haji: University of Amsterdam, the Netherlands

No 15-063/VII, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: In a laboratory experiment, we compare two auction mechanisms that determine the sequence of service to queued customers. In the server-initiated auction, the server, when idle, sells the right to be served next to the highest bidding customer in the queue and distributes the proceeds among the remaining customers. We show that this mechanism has an efficient equilibrium. In the customer-initiated auction, new arrivals can sequentially trade places with queued customers. This mechanism does not have an efficient equilibrium. We use two novel experimental protocols to examine the behavioral properties of both auction mechanisms. We find that, on average, the server-initiated auction and the customer-initiated auction perform equally well in terms of efficiency gain. Moreover, participants indicate that they find the server-initiated auction a fairer mechanism than the customer-initiated auction. When voting between the two auctions, participants tended to favor the server-initiated auction. We also find evidence of endowment and sunk-cost effects, which partially explains deviations from standard theory predictions.

Keywords: Queuing; Auctions; Laboratory experiments; Endowment effect; Sunk-cost effect (search for similar items in EconPapers)
JEL-codes: C44 C91 D44 (search for similar items in EconPapers)
Date: 2015-05-28
New Economics Papers: this item is included in nep-exp
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Trading places: An experimental comparison of reallocation mechanisms for priority queuing (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20150063

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