Allocating Priority with Auctions: An Experimental Analysis

There are many examples of markets where resources that were allocated ex-ante must be rationed ex-post. Two alternative methods of rationing are considered in this paper: priority service (see Chao and Wilson [1987] and Wilson [1989]) and proportional rationing (see Spulber [1989]). An experimental environment is developed in which the two rules are implemented within two well known institutions, the English and the Uniform Price sealed bid Auctions, under two different information conditions. We find that priority service generates more efficient allocations than proportional rationing, the sealed bid auction performed better than the English and that that both mechanisms and rationing rules were more efficient when there was a lack of common information.