Bidding Behaviors in Charity Auctions

Abstract

This paper investigates the importance of bidder types and product types in online charity auctions. Through a large-scale controlled field experiment, the authors identify charitable and non-charitable bidders, and investigate bidding activities in charity and non-charity auctions. Results show that charitable bidders are willing to pay a significant premium in charity auctions, and bid more persistently, continuing to bid in future charity auctions even after losing one. In addition, through the use of a covert agent bidder, this study provides evidence that charitable bidders voluntarily drive up the price in charity auctions, regardless of whether they win the auction. Finally, the authors find that higher value products attain a lower charitable premium relative to their retail value, consistent with diminishing returns to giving.

Keywords: Charity auctions, charitable bidders, field experiment

JEL Classification: D12, M14, M39, C93