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Raising Revenues for Charity: Auctions versus Lotteries

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Author Info
Douglas D. Davis () (Department of Economics, VCU School of Business)
Laura Razzolini () (Department of Economics, VCU School of Business)
Robert Reilly () (Department of Economics, VCU School of Business)
Bart J. Wilson (Interdisciplinary Center for Economic Science, George Mason University)

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Abstract

We report an experiment conducted to gain insight into factors that may affect revenues in English auctions and lotteries, two commonly used charity fund-raising formats. In particular, we examine how changes in the marginal per capita return (MPCR) from the public component of bidding, and how changes in the distribution of values affect the revenue properties of each format. Although we observe some predicted comparative static effects, the dominant result is that lottery revenues uniformly exceed English auction revenues. The similarity of lottery and English auction bids across sales formats appears to drive the excess lottery revenues.

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Publisher Info
Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number 0301.

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Length: 40 pages
Date of creation: Oct 2003
Date of revision:
Handle: RePEc:vcu:wpaper:0301

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Related research
Keywords: auctions; lotteries; charitable giving; experimental tests;

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
D64 - Microeconomics - - Welfare Economics - - - Altruism

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Morgan, John & Sefton, Martin, 2000. "Funding Public Goods with Lotteries: Experimental Evidence," Review of Economic Studies, Blackwell Publishing, vol. 67(4), pages 785-810, October.
  2. Arye L. Hillman & John G. Riley, 1987. "Politically Contestable Rents and Transfers," UCLA Economics Working Papers 452, UCLA Department of Economics. [Downloadable!]
  3. Fang, Hanming, 2002. " Lottery versus All-Pay Auction Models of Lobbying," Public Choice, Springer, vol. 112(3-4), pages 351-71, September. [Downloadable!] (restricted)
  4. Jacob K. Goeree & Emiel Maasland & Sander Onderstal & John L. Turner, 2005. "How (Not) to Raise Money," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 897-926, August.
  5. Baye, M.R. & Kovenock, D. & De Vries, C.G., 1993. "The Solution to the Tullock Rent-Seeking Game when r>2: Mixed-Strategy Equilibria and Mean Dissipation Rates," Purdue University Economics Working Papers 1039, Purdue University, Department of Economics.
    Other versions:
  6. Douglas Davis & Robert Reilly, 1998. "Do too many cooks always spoil the stew? An experimental analysis of rent-seeking and the role of a strategic buyer," Public Choice, Springer, vol. 95(1), pages 89-115, April. [Downloadable!] (restricted)
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  7. Morgan, John, 2000. "Financing Public Goods by Means of Lotteries," Review of Economic Studies, Blackwell Publishing, vol. 67(4), pages 761-84, October.
  8. R. Mark Isaac & Timothy C. Salmon & Arthur Zillante, 2004. "A Theory of Jump Bidding in Ascending Auctions," Game Theory and Information 0404002, EconWPA. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Jeffrey Carpenter & Jessica Holmes & Peter Hans Matthews, 2007. "Endogenous Participation in Charity Auctions," Middlebury College Working Paper Series 0707, Middlebury College, Department of Economics. [Downloadable!]
  2. Rob Moir, 2004. "Lotteries as a funding tool for financing public goods," CEEL Working Papers 0401, Computable and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia. [Downloadable!]
  3. Mark Isaac & Svetlana Pevnitskaya & Tim C. Salmon, 2008. "Individual Behavior In Auctions with Price Proportional Benefits," Working Papers wp2008_07_01, Department of Economics, Florida State University. [Downloadable!]
  4. Carpenter, Jeffrey & Holmes, Jessica & Matthews, Peter Hans, 2004. "Charity Auctions: A Field Experimental Investigation," IZA Discussion Papers 1330, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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