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Charity auctions for the happy few

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  • Bos, Olivier

Abstract

Recent literature has shown that all-pay auctions raise more money for charity than either winner-pay auctions or lotteries. We demonstrate that first-price and second-price winner-pay auctions have a better revenue performance than first-price and second-price all-pay auctions when bidders are sufficiently asymmetric. Lotteries can also provide higher revenue than all-pay auctions. To prove this, we consider a framework with complete information. Complete information is helpful and may reflect events that occur, for instance, in a local service club (such as a voluntary organization) or at a show-business dinner.

Suggested Citation

  • Bos, Olivier, 2016. "Charity auctions for the happy few," Mathematical Social Sciences, Elsevier, vol. 79(C), pages 83-92.
  • Handle: RePEc:eee:matsoc:v:79:y:2016:i:c:p:83-92
    DOI: 10.1016/j.mathsocsci.2015.12.002
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    Cited by:

    1. Gregor, Martin, 2012. "Contest for power in organizations," Economics Letters, Elsevier, vol. 114(3), pages 280-283.
    2. Bos, Olivier, 2016. "Charity auctions for the happy few," Mathematical Social Sciences, Elsevier, vol. 79(C), pages 83-92.
    3. Bos, Olivier, 2011. "How lotteries outperform auctions," Economics Letters, Elsevier, vol. 110(3), pages 262-264, March.
    4. Paan Jindapon & Zhe Yang, 2020. "Free riders and the optimal prize in public‐good funding lotteries," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1289-1312, September.
    5. Fu, Qiang & Lu, Jingfeng, 2013. "Competitive effect of cross-shareholdings in all-pay auctions with complete information," International Journal of Industrial Organization, Elsevier, vol. 31(3), pages 267-277.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers

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