| Abstract: | In a laboratory experiment, we compare two auction mechanisms that are designed to improve a queue's efficiency by allowing customers to trade places. 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. In the customer‐initiated auction, new arrivals can sequentially trade places with queued customers. We use two novel experimental protocols to examine the behavioral properties of both auction mechanisms. We find that both auction mechanisms improve a queue's efficiency on average and that both perform equally well in terms of efficiency gain. We also find evidence of the sunk‐cost effect but not of the endowment effect. Participants indicated that they found the server‐initiated auction a fairer mechanism than the customer‐initiated auction. When voting between the two auctions, the participants tended to favor the server‐initiated auction. |
