Chinese auction
{{Short description|Type of all-pay auction}}
{{auction}}
Chinese auction is a type of the all-pay auction, where the probability of winning depends on the relative size of a participant's bid.{{cite journal |last1=Benegas |first1=Mauricio |title=Bidding behavior in a symmetric Chinese auction |journal=EconomiA |date=1 January 2015 |volume=16 |issue=1 |pages=93–110 |doi=10.1016/j.econ.2015.03.003 |s2cid=154752695 |issn=1517-7580|doi-access=free |hdl=10419/179589 |hdl-access=free }} The choice of the winner is done by a lottery, whereby the bidders compete for a higher chance of winning.
It is also known as penny raffle, chance auction and tricky tray.{{cite journal |last1=MCLENNAN |first1=Andy |title=Efficient disposal equilibria of pseudomarkets |journal=Workshop on Game Theory |date=2018 |page=8 |url=https://imsarchives.nus.edu.sg/oldwww2/events/2018/dyna/files/wk1.pdf}}
Etymology
The origin of the name is unknown but is thought to originated from the 19th Century when the term "Chinese" came to be used to mean cheap and described the inexpensive cost of the raffle and prizes.{{cite web | last=Carlin | first=Blair | title=What's a Chinese Auction? Overview & Modern Alternatives | website=OneCause | date=5 August 2020 | url=https://www.onecause.com/blog/chinese-auction-definition/ | access-date=2 May 2024}}
There is no connection to Chinese culture.{{cite news |title=Opinion: With Certain Words, Watch Your Mouth |url=https://www.nytimes.com/2006/03/12/opinion/nyregion/with-certain-words-watch-your-mouth-861510.html |access-date=28 October 2023 |work=The New York Times |date=12 March 2006}}
Significance
Chinese auctions are usually conducted during charity events for fundraising.{{cite book |last1=Heiss |first1=Renee |title=Helping Kids Help: Organizing Successful Charitable Projects |date=2007 |publisher=Chicago Review Press |isbn=978-1-56976-211-0 |url=https://books.google.com/books?id=0zCsS6qfbAQC |language=en}} Political elections and patent races can be modeled as Chinese auctions, in which the chance of winning is seen as proportional to the amount spent.{{cite web |last1=Shor |first1=Mikhael |title=Chinese Auction - Game Theory .net |url=https://www.gametheory.net/dictionary/Auctions/ChineseAuction.html |website=www.gametheory.net |access-date=28 October 2023}}
Controversy
Some sources consider the term "chinese auction" as derogatory.{{cite news |title=Nothing Chinese about an auction |url=https://www.sunjournal.com/2019/09/12/nothing-chinese-about-an-auction/ |access-date=19 July 2024 |work=Lewiston Sun Journal |date=12 September 2019}}