“Trading Places: An Experimental Comparison of Reallocation Mechanisms for Priority Queuing”, 2019-03-27 (; backlinks):
[cf. Landsburg] 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.
…We compare the behavioral properties of the two mechanisms in a laboratory experiment. To do so, we use two novel experimental protocols. Our first protocol implements induced waiting costs. The efficiency gain resulting from the auctions can be readily measured because the induced waiting costs are known to the experimenter. The second protocol involves actual waiting. We used this protocol to determine the order by which participants could leave the laboratory. Participants vote for either of the two auction mechanisms and a majority rule determines which auction is actually implemented. In addition, participants were asked to rate the auctions in terms of fairness on a 5-point Likert scale.
…Our main results are the following. First of all, the two auction mechanisms considered do not differ in a statistical meaningful way with respect to the average efficiency gain. This is surprising in light of our theoretical findings that the server-initiated auction has an efficient equilibrium while the customer-initiated auction does not. In a deeper examination of our data, we do observe differences between the auctions in terms of efficiency gains: Efficiency gains are statistically-significantly greater [lower] in the server-initiated auction than in the customer-initiated auction if the initial queuing order is relatively inefficient (efficient). Neither auction comes close to always reaching an efficient outcome. For the server-initiated auction, this result is rooted in noisy individual bidding behavior that is partly explained by a sunk-cost effect but not by a noticeable endowment effect. In the customer-initiated auction, the queuing order remains relatively inefficient because customers bid more aggressively for their current position than arriving bidders do. In addition, we find evidence of a sunk-cost effect in the customer-initiated auction. Finally, when given the choice between the two auction mechanisms, participants tended to favor the server-initiated auction. This may be partly explained by participants evaluating the server-initiated auction as fairer than the customer-initiated auction.