Charity Art Auctions

Abstract

Using a unique dataset of art auctions on eBay, we conduct an empirical analysis of the added value of an auction's charity status. The panel structure of our dataset allows us to employ fixed effects techniques to control for observed and unobserved differences across auctions. The existing literature suggests a quantitatively small impact of charity status on sale price. In contrast, our results point to a highly significant, and sizable, impact of charity status on the behavior of buyers and sellers and on market outcomes. For a certain group of auctions in particular, charity status increases the second highest bid by 103%, on average, when compared with standard auctions, and the probability of sale by 55%. Charity status also has a significant impact on the opening bid and the number of bidders participating in the auction. Interestingly, the ending date of the auction has an important impact on the outcome of the charity auction.