Cong Tao

Cong Tao

Auction Theory, Behavioural and Experimental Economics

Working Papers and Publications

When Speed is of Essence: Perishable Goods Auctions

Joural of Economic Theory, 2026

We study a remarkable auction used in several fish markets around the world, notably in Honolulu and Sydney, whereby high-quality fish are sold fast through a hybrid auction that combines the Dutch and the English formats in one auction. Speedy sales are of essence for these perishable goods. Our theoretical model incorporating “time costs” demonstrates that such Honolulu-Sydney auction is preferred by the auctioneer over the Dutch auction when there are few bidders or when bidders have high time costs. Our laboratory experiments confirm that with a small number of bidders, Honolulu-Sydney auctions are significantly faster than Dutch auctions. Bidders overbid in Dutch, benefiting the auctioneer, while the Honolulu-Sydney format benefits bidders more compared to Dutch across all treatments. We further observe bidder attempts to tacitly lower prices in Honolulu-Sydney auctions, substantiating existing concerns about pricing in some fish markets.

Recommended citation: Hafalir, I., Kesten, O., Sherstyuk, K., & Tao, C. (2026). When speed is of essence: Perishable goods auctions. Journal of Economic Theory, 106149.

Download paper

Istanbul Flower Auction: The Need for Speed

Working Paper R&R to Games and Economic Behavior, 2025

We examine a unique auction format used in the Istanbul flower market, which could transform into either Dutch or English auction depending on bidders’ bidding behaviors. By introducing a time cost that reduces the value of a perishable good as time passes, we explore how this hybrid auction format accommodates the desire for speed via an adaptive starting price. We show that the Istanbul Flower Auction outperforms both the Dutch and English auctions in terms of the auctioneer’s utility. With numerical analysis, we also illustrate the Istanbul Flower Auction’s superiority in terms of social welfare and auction duration. Our results highlight the critical role of auction design in improving welfare when the duration of the auction process plays a role.

Recommended citation: Hafalir, I., Kesten, O., Luo, D., Sherstyuk, K., & Tao, C. (2024). Istanbul Flower Auction: The Need for Speed. arXiv preprint arXiv:2404.08288.

Download paper

Repeated Gambles with Bundled Options: A Behavioural Model of Probability Misperception

Work in Progress, 2024

This paper explains the mechanics of toy vending machines in mobile games using prospect theory and naivety. It demonstrates that naive players who perceive independent probabilities in a history-dependent way can be induced to play for longer than optimal, thereby increasing the game provider’s profits. Free initial rounds can entice naive players to start a game that will ultimately harm them. Bundling two rounds together increases the likelihood that naive players continue to play due to their probability misperception. Numerical examples further support the feasibility and profitability of this mechanism.

Recommended citation:

Download paper