Asymmetric valuations in charity auctions

This study experimentally investigates how different auction formats—specifically English auctions and All-Pay auctions—affect charitable giving under varying valuation conditions. In each experimental session, two participants bid for an item under one of the two auction formats. The key intervention involves manipulating two factors within subjects: (1) auction format (English vs. All-Pay) and (2) valuation symmetry (Symmetric vs. Asymmetric valuations). In symmetric conditions, both bidders receive the same private valuation of the item (180 tokens); in asymmetric conditions, one bidder receives a high valuation (240 tokens) and the other a low valuation (120 tokens).

To embed the charitable context, the total revenue from each auction (either the sum of both bids in the All-Pay format or the winner’s payment in the English auction) is equally split between both participants and is explicitly framed as a contribution to a charitable cause. Participants are informed about this charitable framing prior to bidding. This intervention aims to identify whether auction format and valuation structure jointly affect the amount of money raised for charity.

The study is a within-subject laboratory experiment designed to examine how auction format (English vs. All-Pay) and bidder valuation symmetry (symmetric vs. asymmetric) influence revenue generation in a charitable context. Each participant takes part in six auction rounds, split evenly across two auction formats: three English auctions and three All-Pay auctions. The order of auction formats is randomized across participants to control for order effects.

Each auction round features one of three valuation combinations: [180,180] (symmetric), [120,240], or [240,120] (asymmetric). Each participant is assigned one of these valuation combinations per round, and the order of valuations is also randomized. Valuations are common knowledge: both players know their own and their opponent’s valuation in every round.

In each round, participants are matched in pairs and submit bids according to the rules of the current auction format:

English auction: open, ascending bidding; winner pays the second-highest bid.

All-Pay auction: sealed bidding; all participants pay their bid, and the highest bidder wins.

Each participant begins with a starting capital of 200 tokens. The revenue from each round is calculated based on the auction format:

In All-Pay, it is the sum of both bids.

In English, it is the winner’s payment (second-highest bid).

To simulate charitable giving, 40% of the total revenue from each round is added to each player’s earnings, regardless of whether they win the item. Participants are not shown the outcome of each round; instead, they are only presented with their total results after all six rounds are complete. This is to prevent learning effects or strategic adjustment across rounds based on observed outcomes.

The final payment to each participant is determined as follows:
(200 + sum of all round earnings) × €0.03.

This design allows us to causally identify how auction format and valuation symmetry interact to affect charitable revenue and bidder behavior in a controlled, incentive-compatible setting.

2025-05-26

2025-05-27

The key outcome variables of interest in this experiment are:

Revenue Generated per Auction Round

Defined as:

The sum of both bids in the All-Pay auction.

The second-highest bid (i.e., the amount paid by the winner) in the English auction.

This measures the effectiveness of each auction format in raising charitable funds.

Total Revenue per Auction Type and Valuation Condition

Aggregated across rounds to assess how auction format and valuation symmetry/asymmetry affect overall charitable revenue.

Comparison of Revenue between Symmetric and Asymmetric Valuations

To test whether symmetric valuations generate more charitable revenue than asymmetric ones, within each auction type.

Bidder Behavior (Bid Amounts)

Average bid amounts across auction formats and valuation types to assess how format and valuation influence strategic bidding behavior.

These outcomes will be used to test the study’s main hypotheses regarding the interaction between auction type and valuation symmetry in determining the effectiveness of charity auctions.

Experimental Design (Public):

This study uses a within-subject laboratory experiment to examine how auction format and bidder valuation symmetry affect revenue in charity auctions. Each participant takes part in six auction rounds, split between two auction formats: three English auctions and three All-Pay auctions. The order of auction formats is randomized across participants.

Participants are paired in each round and assigned one of three valuation profiles: [180,180] (symmetric), [120,240], or [240,120] (asymmetric). These valuations are also randomized across rounds and are common knowledge—both bidders know each other's valuation in each round.

Auctions are framed as charity auctions: 40% of the revenue generated in each round is added to each participant’s earnings, regardless of outcome. Participants are not shown individual round results during the experiment; instead, they see their total results after all six rounds.

This design allows us to isolate the effect of auction type and valuation symmetry on charitable revenue while controlling for learning and strategic adaptation.

Experimental Design (Hidden):

The experiment uses a within-subject 2×2 design to study the effects of auction format (English vs. All-Pay) and valuation symmetry (Symmetric vs. Asymmetric) on revenue generation in charity auctions.

Participants and Rounds:
Each participant plays six auction rounds, where:

Three rounds are conducted using the English auction format.

Three rounds are conducted using the All-Pay auction format.

The order of auction formats is randomized for each participant.

In each round, participants are assigned valuation profiles:

Symmetric valuations: [180, 180]

Asymmetric valuations: [120, 240] or [240, 120]

Each participant plays all three valuation types across the six rounds, and the order of valuations is randomized as well. Participants are rematched across rounds to prevent partner-specific effects. Importantly, all valuations are common knowledge: both bidders see their own and their opponent’s valuation before bidding.

Auction Format Details:
English Auction: Open ascending bids; the winner pays the second-highest bid.

All-Pay Auction: Sealed bids; all bidders pay their bids, and the highest bidder wins.

Charity Framing:
Auctions are framed as charitable: 40% of the revenue from each round is added to each participant’s earnings, simulating a charitable contribution. Revenue is defined as:

The sum of both bids in All-Pay.

The second-highest bid (winner’s payment) in English.

Participants are informed of this framing and know that their earnings include a share of the charitable revenue generated in each round.

Feedback and Payment:
Participants are not shown the outcome of individual rounds during the experiment to avoid learning or strategic shifts. They only see their total earnings at the end of all six rounds.

Each participant starts with a capital of 200 tokens. Final payment is calculated as:
(200 + total round earnings) × €0.02.

This design ensures full control over treatment exposure while enabling precise causal inference on the interaction between auction mechanism and valuation symmetry in charitable contexts.

Randomization done in lab by a computer

Random selection of groups (random matching)
Random selection of order of auction type
Random selection of order of valuations played

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