Abstract

We modeled charity auctions and conducted controlled and uncontrolled online field studies of them. In controlled experiments, charity auctions had fewer bidders but higher revenue than non-charity auctions. Bidders in them acted like volunteer shills, increasing prices. Bidders paid relatively higher prices for frivolous items and for ^Ócommon value^Ô items. Auctions with 25% of revenue donated to charity had higher net revenue than non-charity auctions, suggesting that doing good while doing well is possible.

Michael H. Rothkopf is an applied mathematical modeler. He has been a full professor in RUTCOR, the operations research center, and in the Management Science and Information Systems Department at Rutgers University since 1988. He headed the Energy Analysis Program at Lawrence Berkeley Laboratory, and had 18 years of industrial OR experience. He has a BA in math from Pomona College and a MS in industrial management and a PhD in operations research from MIT. In addition to Rutgers, he has taught at the University of California, Stanford and the Wharton School. He was editor-in-chief of Interfaces and president of INFORMS. He has published over 65 scientific papers in refereed archival journals in operations research, management science, the social sciences, and engineering. He has co-edited two books including a handbook on operations research in the public sector. Many of his papers deal with mathematical modeling of auctions and markets. The hallmark of his approach to modeling auctions has been the inclusion of important but usually neglected factors.