A Study of Bidding Behavior in Voluntary-Pay Philanthropic Auctions

67 Pages Posted: 9 Mar 2013 Last revised: 19 Nov 2017

See all articles by Ernan Haruvy

Ernan Haruvy

University of Texas at Dallas - Naveen Jindal School of Management

Peter T. L. Popkowski Leszczyc

University of Queensland - Business School

Date Written: November 17, 2017

Abstract

The authors investigate compliance behavior and revenue implications in simultaneous winner-pay and voluntary-pay auctions in charity and non-charity settings. In the voluntary-pay format, the seller asks all bidders to pay their own high bid, with voluntary payment compliance from losing bidders. The authors explore motives and boundary conditions for compliance behavior based on internal and external triggers of social norms. Despite imperfect compliance, the voluntary-pay format generates higher revenue than the winner-pay format for charity auctions. In contrast, in the non-charity setting, winner-pay auctions generate higher collected revenue. Non-paying losing bidders play an important role in this as they bid more aggressively. To characterize bidding strategy, the authors study time-to-bid, auction choice, and jump bidding and find evidence that bidders in voluntary-pay auctions more commonly use jump bidding and late entry.

Keywords: Voluntary-pay auctions, charity auctions, jump bidding, late bidding

Suggested Citation

Haruvy, Ernan and Popkowski Leszczyc, Peter T. L., A Study of Bidding Behavior in Voluntary-Pay Philanthropic Auctions (November 17, 2017). Available at SSRN: https://ssrn.com/abstract=2229260 or http://dx.doi.org/10.2139/ssrn.2229260

Ernan Haruvy (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Peter T. L. Popkowski Leszczyc

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

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