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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. 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.

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.

There is no connection to Chinese culture.

Significance

Chinese auctions are usually conducted during charity events for fundraising. 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.

Controversy

Some sources consider the term "chinese auction" as derogatory.

References

1. ^ Benegas, Mauricio (1 January 2015). "Bidding behavior in a symmetric Chinese auction". EconomiA. 16 (1): 93–110. doi:10.1016/j.econ.2015.03.003. hdl:10419/179589. ISSN 1517-7580. S2CID 154752695.
2. ^ "Opinion: With Certain Words, Watch Your Mouth". The New York Times. 12 March 2006. Retrieved 28 October 2023.
3. MCLENNAN, Andy (2018). "Efficient disposal equilibria of pseudomarkets" (PDF). Workshop on Game Theory: 8.
4. Carlin, Blair (5 August 2020). "What's a Chinese Auction? Overview & Modern Alternatives". OneCause. Retrieved 2 May 2024.
5. Heiss, Renee (2007). Helping Kids Help: Organizing Successful Charitable Projects. Chicago Review Press. ISBN 978-1-56976-211-0.
6. Shor, Mikhael. "Chinese Auction - Game Theory .net". www.gametheory.net. Retrieved 28 October 2023.
7. "Nothing Chinese about an auction". Lewiston Sun Journal. 12 September 2019. Retrieved 19 July 2024.

• All-pay auction
• Anti-Chinese sentiment