“Bucket auctions” for charity

• Donations in-kind can be a mixed blessing for charities, who are often more adept at solicitation than resale.
• Theory predicts that all-pay mechanisms should produce more revenue than winner-pay mechanisms.
• We examine a new all-pay mechanism and show that it generates considerably more revenue than any other standard mechanism.

Donations in-kind can be a mixed blessing for charities, who are often more adept at solicitation than resale. Many organizations rely on raffles to turn donations into cash, but auctions are also common. Theory predicts that all-pay mechanisms should produce more revenue than winner-pay mechanisms, but the empirical literature is thin and inconclusive. Drawing on both theoretical insights and behavioral intuition, we examine another all-pay mechanism, the “bucket auction,” and show that it generates more revenue than other standard mechanisms, both in theory and in the lab. We hope, therefore, that this format, and others like it, will attract the interest of fundraisers.