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. [1] The choice of the winner is done by a lottery, whereby the bidders compete for a higher chance of winning. [1]
It is also known as penny raffle , chance auction and tricky tray. [2] [3]
The origin of the name is unknown [1] 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. [2] [4]
There is no connection to Chinese culture. [2]
Chinese auctions are usually conducted during charity events for fundraising. [5] 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. [6]
Some sources consider the term "chinese auction" as derogatory. [2] [7]
