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

Tinbergen Institute Discussion Paper 15-063/VII

33 Pages Posted: 28 May 2015

See all articles by Anouar El Haji

Anouar El Haji

University of Amsterdam; Amsterdam Business School

Sander Onderstal

University of Amsterdam; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: May 27, 2015

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

JEL Classification: C44, C91, D44

Suggested Citation

El Haji, Anouar and Onderstal, Sander, Trading Places: An Experimental Comparison of Reallocation Mechanisms for Priority Queuing (May 27, 2015). Tinbergen Institute Discussion Paper 15-063/VII, Available at SSRN: https://ssrn.com/abstract=2611533 or http://dx.doi.org/10.2139/ssrn.2611533

Anouar El Haji (Contact Author)

University of Amsterdam; Amsterdam Business School ( email )

Roetersstraat 18
Amsterdam, 1018WB
Netherlands

Sander Onderstal

University of Amsterdam ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
76
Abstract Views
1,016
rank
377,074
PlumX Metrics