This weekend we attended a charity auction for my kids’ pre-school.  What does a game theorist think about at a charity auction?

  1. 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?
  2. 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.
  3. 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?
  4. 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.
  5. 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.
  6. 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?
  7. 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.
  8. 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:

The game of chicken

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.