CHARITY AUCTIONS

Maxim Engers and Brian McManus

International Economic Review, 2007, vol. 48, issue 3, 953-994

Abstract: In a charity auction the public-goods nature of auction revenue affects bidding incentives. We compare equilibrium bidding and revenue in first-price, second-price, and all-pay charity auctions. Bidding revenue typically varies by selling format. First-price auctions are less lucrative than second-price and all-pay auctions, and with sufficiently many bidders the all-pay auction has the highest bidding revenue. However, revenue equivalence applies when the auctioneer can set a reserve price and fees plus threaten to cancel the auction. If the auctioneer cannot threaten cancellation, a reserve and bidding fee can augment revenue but again revenue varies by auction format Copyright 2007 by the Economics Department Of The University Of Pennsylvania And Osaka University Institute Of Social And Economic Research Association.

Date: 2007
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