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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26443
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| Title: | | Charity auctions for the happy few  |
| Authors: | | Bos, Olivier |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2398 |
| Abstract: | | 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. |
| Subjects: | | All-pay auctions charity complete information externalities |
| JEL: | | D44 D62 D64 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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