This weekend we attended a charity auction for my kids’ pre-school. What does a game theorist think about at a charity auction?
- There is a “silent auction” (sealed bid), followed by a live auction (open outcry). How do you decide which items to put in the live auction?
- The silent auction is anonymous, so items with high signaling value should be moved to the live auction. A 1 week vacation in Colorado sold for less than $1000 (who would want to signal that they don’t already have their own summer home?) wheras a day of working as an assistant at Charlie Trotter’s sold for $2500.
- There is a raffle. You sell those tickets at the door when people are distracted and haven’t started counting how much they have spent yet. But what price do you set?
- The economics of the charity auction are such that vendors with high P-MC markups can donate a high value item (high P) for a low cost (low MC). This explains why the items usually have a boutique quality to them.
- In the silent auction, you write down your bids with a supplied pen on the bid sheet. Sniping is pervasive. Note for next year: bring a cigarette lighter. You make your last minute bids and then melt the end of the pen just enough to stop the ink from flowing.
- When you are in suburban Winnetka on Chicago’s North Shore, for which kind of item is the winner’s curse the strongest: art or sports tickets/memorabilia?
- One of the live auction side-events is a pure signaling game where you are asked to give an amount of money to a special fund. They start with a very high request and after everyone who is willing to give that much has raised their hand, they continually lower the request. I think this is the right timing. With the ascending version the really big donors will give too early.
- How do you respond when asked to pay to enter a game with the rules to be announced later? Answer: treat it like a raffle. Surprise answer: A chicken will be placed in a cage. The winner of the game is the player whose number the chicken poops on.
That didn’t turn out to be such a good idea. Someone forgot to put a lid on the cage and the chicken, well-versed in the hold-up problem, found a way to use his monopoly power:
That is an actual-use, signed and engraved hockey stick from Patrick Kane of the Chicago Blackhawks. It subsequently sold for over $1000. The chicken was unharmed and eventually spent the evening perched on a rafter high above the proceedings threatening to select a winner directly.