Hostname: page-component-7b9c58cd5d-dlb68 Total loading time: 0 Render date: 2025-03-16T13:05:13.814Z Has data issue: false hasContentIssue false
  • English
  • Français

Do preferences for charitable giving help auctioneers?

Published online by Cambridge University Press:  14 March 2025

R. Mark Isaac ,
Svetlana Pevnitskaya  and
Timothy C. Salmon
R. Mark Isaac*
Affiliation:
Department of Economics, Florida State University, Tallahassee, FL 32306-2180, USA
Svetlana Pevnitskaya*
Affiliation:
Department of Economics, Florida State University, Tallahassee, FL 32306-2180, USA
Timothy C. Salmon*
Affiliation:
Department of Economics, Florida State University, Tallahassee, FL 32306-2180, USA
*
e-mail: [email protected]
e-mail: [email protected]
e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

Preferences for charitable giving in auctions can be modeled by assuming that bidders receive additional utility proportional to the revenue raised by an auctioneer. The theory of bidding in the presence of such preferences results in a very counterintuitive prediction which is that, in many cases, bidders having preferences for charitable giving does not lead to a substantial revenue advantage for an auctioneer. We test this theory and this prediction with a series of experiments. In one experiment we induce charitable preferences exactly as specified in the model to see if bidders respond to them as predicted. We find that they do. We then conduct a second experiment in which the revenue from the auctions is donated to actual charities to verify the robustness of the prediction when charitable preferences are generated by a more natural source and find again that the theoretical prediction holds: even strong charitable preferences do not result in substantial revenue increases to the auctioneer.

Keywords

AuctionsCharitable givingEconomic experiments

JEL classification

D64: Altruism • Philanthropy • Intergenerational Transfers D44: Auctions
Type
Research Article
Information
Experimental Economics , Volume 13 , Issue 1 , March 2010 , pp. 14 - 44
Copyright
Copyright © Economic Science Association 2009

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

The authors would like to thank participants of the Rome ESA International meeting, Econometric Society Summer 2008 meeting and Michael H. Rothkopf Memorial Conference for helpful comments. This study was funded in part by a grant from the National Science Foundation, grant #0451970.

Electronic supplementary material The online version of this article (http://dx.doi.org/10.1007/s10683-009-9227-7) contains supplementary material, which is available to authorized users.

References

Andreoni, J., & Petrie, R. (2004). Public goods experiments without confidentiality: a glimpse into fundraising. Journal of Public Economics, 88(7-8), 1605–1623.CrossRefGoogle Scholar
Carpenter, J., Holmes, J., & Matthews, P. (2008). Charity auctions: a field experiment. The Economic Journal, 118, 92–113.CrossRefGoogle Scholar
Corazzini, L., Faravelli, M., & Stance, L. (2007). A prize to give for: an experiment on public good funding mechanisms (Working Paper). University of Milan-Bicocca.Google Scholar
Corns, A., & Schotter, A. (1999). Can affirmative action be cost effective? An experimental examination of price-preference auctions. American Economic Review, 89(1), 291–305.CrossRefGoogle Scholar
Cox, J. C., Roberson, B., & Smith, V. L. (1982). Theory and behavior of single object auctions. In Research in experimental economics (Vol. 2, pp. 1–43). London: JAI Press.Google Scholar
Cox, J. C., Smith, V. L., & Walker, J. M. (1988). Theory and individual behavior of first price auctions. Journal of Risk and Uncertainty, 1, 61–99.CrossRefGoogle Scholar
Davis, D. D., Razzolini, L., Reilly, R., & Wilson, B. J. (2006). Raising revenue for charity: auctions versus lotteries. In Davis, D.D. & Isaac, R.M. (Eds.), Research in experimental economics (Vol. 11, pp. 4995). New York: JAI Press.Google Scholar
Elfenbein, D. W., & McManus, B. (2007). A greater price for a greater good? The charity premium in online auctions (Working Paper). Washington University in St. Louis School of Business.Google Scholar
Engelbrecht-Wiggans, R. (1994). Auctions with price proportional benefits to bidders. Games and Economic Behavior, 6, 339–346.CrossRefGoogle Scholar
Engers, M., & McManus, B. (2007). Charity auctions. International Economic Review, 48(3), 953–994.CrossRefGoogle Scholar
Fischbacher, U. (2007). z-Tree: Zurich toolbox for readymade economic experiments. Experimental Economics, 10(2), 171–178.CrossRefGoogle Scholar
Gächter, S., & Fehr, E. (1999). Collective action as a social exchange. Journal of Economics Behavior and Organization, 39(4), 341–369.CrossRefGoogle Scholar
Glazer, A., & Konrad, K. A. (1996). A signaling explanation for charity. American Economic Review, 86(4), 1019–1028.Google Scholar
Goeree, J., & Offerman, T. (2004). The Amsterdam auction. Econometrica, 72(1), 281–294.CrossRefGoogle Scholar
Goeree, J. K., Maasland, E., Onderstal, S., & Turner, J. L. (2005). How (Not) to raise money. Journal of Political Economy, 113(4), 897–918.CrossRefGoogle Scholar
Isaac, R. M., & Schnier, K. (2005a). Sealed bid variations on the silent charity auction (Working Paper). Florida State University.Google Scholar
Isaac, R. M., & Schnier, K. (2005b). Silent auctions in the field and in the laboratory. Economic Inquiry, 43(4), 715–733.CrossRefGoogle Scholar
Ivanova-Stenzel, R., & Salmon, T. C. (2008). Revenue equivalence revisited. Games and Economic Behavior, 64(1), 171–192.CrossRefGoogle Scholar
Morgan, J., Steiglitz, K., & Reis, G. (2003). The spite motive and equilibrium behavior in auctions. Contributions to Economic Analysis & Policy 2(1), Article 5.Google Scholar
Orzen, H. (2008). Fundraising through competition: evidence from the lab (Working Paper). University of Nottingham.Google Scholar
Palfrey, T. R., & Pevnitskaya, S. (2008). Endogenous entry and self-selection in private value auctions: an experimental study. Journal of Economic Behavior and Organization, 66(3-4), 731–747.CrossRefGoogle Scholar
Popkowski-Leszczyc, P. T. L., & Rothkopf, M. H. (2009). Charitable motives and bidding in charity auctions (Working Paper). University of Alberta.Google Scholar
Rege, M., & Telle, K. (2004). The impact of social approval and framing on cooperation in public good situations. Journal of Public Economics, 88(7-8), 1625–1644.CrossRefGoogle Scholar
Salmon, T. C. (2004). Spectrum auctions by the United States federal communications commission. In Janssen, M.C.W. (Ed.), Auctioning public assets: analysis and alternatives (pp. 147–176). Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Salmon, T. C., & Isaac, R. M. (2006). Revenue from the saints, the showoffs, and the predators: comparisons of auctions with price-preference values. In Davis, D., & Isaac, R.M. (Eds.), Research in experimental economics (pp. 1–30). New York: JAI Press.Google Scholar
Schram, A. J., & Onderstal, S. (2009). Bidding to give: an experimental comparison of auctions for charity. International Economic Review, 50(2), 431–457.CrossRefGoogle Scholar
Shachat, J., & Swarthout, J. T. (2002). Procurement auctions for differentiated goods (Working Paper). IBM Research Labs.Google Scholar
Supplementary material: File

Isaac et al. supplementary material

Isaac et al. supplementary material 1
Download Isaac et al. supplementary material(File)
File 194.1 KB
Supplementary material: File

Isaac et al. supplementary material

Isaac et al. supplementary material 2
Download Isaac et al. supplementary material(File)
File 1.2 MB
Supplementary material: File

Isaac et al. supplementary material

Instructions for Sessions with Induced Preferences
Download Isaac et al. supplementary material(File)
File 80.7 KB