Will Bidders Bid Higher in Charity Auctions?

Abstract

Whether buyers are willing to pay higher prices for products with charity donation? An auction platform with donation options provides a unique venue for investigating whether bidders perceive higher shared value created by online sellers, or companies in general, listing auctions with charity donation, and, therefore, are willing to bid higher for those auctions. This paper draws 858 auctions selling brand new products listed in eBay for Charity program from the US and UK to examine these phenomena. The empirical results suggest that pure charity auctions will receive higher prices than cause-related and non-charity auctions. Although cause-related auctions also earn higher prices than non-charity auctions, the relationship is less strong comparing to pure charity auctions. Furthermore, the anchoring effect is positive and significant on the relationship between pure charity auctions and total prices; however, it loses its momentum on affecting bidders’ behaviors in bidding cause-related auctions. Interestingly, however, auction competition is increasing the total price of cause-related auctions, but insignificantly influences the total prices of pure charity auctions. These findings suggest that bidders’ perceptions of resource commitment to charitable donations influence their valuations across different scenarios, offering additional understanding of shared value creation and informing the design and implementation of social initiatives.