Charity Auctions

31 Pages Posted: 28 Aug 2002

See all articles by Maxim Engers

Maxim Engers

University of Virginia - Department of Economics

Brian McManus

University of North Carolina (UNC) at Chapel Hill - Department of Economics

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Date Written: August 2002

Abstract

We present a model of charity auctions in which all bidders receive a benefit from the host charity raising revenue. Bidding behavior reflects two conflicting incentives: Bids may be inflated because of private benefits from charitable giving, or bids could be depressed by the public goods nature of auction revenue. We study first- and second-price auctions and all-pay auctions. Revenue equivalence is unbalanced whenever a bidder benefits from the charity collecting another bidder's money. All-pay and second-price auctions have higher expected revenue than first-price auctions. The revenue ranking of all-pay and second-price auctions depends on parameter values, but as the number of bidders becomes large the all-pay auction is more lucrative than either single-price format.

Keywords: auctions, revenue equivalence, public goods, charitable giving

Suggested Citation

Engers, Maxim P. and McManus, Brian, Charity Auctions (August 2002). Available at SSRN: https://ssrn.com/abstract=321662 or http://dx.doi.org/10.2139/ssrn.321662

Maxim P. Engers

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States
804-924-3130 (Phone)
804-924-7659 (Fax)

Brian McManus (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

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