Charity auctions for the happy few

Arbeitspapier

Recent literature has shown that all-pay auctions raise more money for charity than winner-pay auctions. We demonstrate that the first and second-price winner-pay auctions generate higher revenue than first-price all-pay auctions when bidders are sufficiently asymmetric. To prove it, we consider a framework with complete information. This analysis is relevant for two main reasons. On the one hand, complete information is more realistic and corresponds to events which occur for instance in a local service club (like in a voluntary organization) or in a show business dinner. Potential bidders are acquaintances or know one another well. On the other hand, our model keeps the qualitative predictions of a private value model under incomplete information in which bidders are ex ante asymmetric, which means that bidders' values are drawn from different distributions. Furthermore, we also analyze second-price all-pay auction. Finally, we show that individual minimum bids could improve the relative revenue performance of first-price all-pay compared to first-price winner-pay auction.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 2398

Classification and Topics

• Classification: Wirtschaft ; Auctions ; Externalities ; Altruism; Philanthropy; Intergenerational Transfers
• Subject: All-pay auctions ; charity ; complete information ; externalities ; Wohltätigkeit ; Auktionstheorie ; Vollkommene Information ; Externer Effekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bos, Olivier
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/26443
• Last update: 10.03.2025, 11:42 AM CET