Contests & Conflict | 28.09.2022 | 16:00
Born to wait? A study of allocation rules in booking systems

Referent: Lingbo Huang

Date & Time: Los Angeles (7 am), Cincinnati (10 am), Bath (3 pm), Munich (4 pm), Beijing (10 pm), Singapore (10 pm), Sydney (September 29, 12 am)

Lingbo Huang will present the paper titled "Born to wait? A study of allocation rules in booking systems" (joint work with Tracy Xiao Liu, and Jun Zhang).

This talk is part of the Global Seminar on Contests & Conflict, a bi-weekly online seminar series with researchers from across the world. You can sign up to the Global Network to get information and invitations (including the Zoom Link for each event) about the Global Seminar hereMax-Planck-Institut für Steuerrecht und Öffentliche Finanzen: Global Seminar on Contests & Conflict (mpg.de).

Abstract of the Paper:
When designing allocation rules for scarce goods or services, market designers often face the issue of balancing between efficiency and fairness. Critically, resolving this issue requires quantifying various forms of efficiency losses. We document that a previously understudied source of efficiency loss stemming from queuing can be substantial in many real-world booking systems using first-come-first-served allocation rules. We provide a novel experimental framework that allows us to quantify and compare different sources of efficiency losses across different allocation rules. The theory predicts and lab experiments confirm that the efficiency loss due to opportunity costs of time spent on queuing overwhelms any other efficiency concerns in a booking system based on queuing. However, such loss is almost completely eliminated in a booking system based on lotteries. We also develop and test a novel dual-track system that allows participants to freely choose their preferred allocation rule. We observe a majority prefers the allocation rule based on lotteries over the rule based on queuing.

Chair: Tracy Liu, Co-Chair: Qiang Fu and Lionel Page

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