Charity auctions for the happy few

• All-pay auctions, winner-pay auctions and lotteries are compared for fundraising activities.
• Recent literature determines that all-pay auctions raise more money for charity.
• Asymmetric participants and complete information can reverse this result.

Recent literature has shown that all-pay auctions raise more money for charity than either winner-pay auctions or lotteries. We demonstrate that first-price and second-price winner-pay auctions have a better revenue performance than first-price and second-price all-pay auctions when bidders are sufficiently asymmetric. Lotteries can also provide higher revenue than all-pay auctions. To prove this, we consider a framework with complete information. Complete information is helpful and may reflect events that occur, for instance, in a local service club (such as a voluntary organization) or at a show-business dinner.