SILENT AUCTIONS IN THE FIELD AND IN THE LABORATORY

I. INTRODUCTION The American Association of Fundraising Counsel estimates that there was $240.72 billion donated by private individuals, foundations, estates, and corporations to charities in 2003 and that total charitable giving amounts to approximately 2.2% of the gross domestic product (www.aafrc.org/press_releases/ trustreleases/americansgive.html). The total amount raised by charitable or nonprofit organizations includes not only direct contributions but also amounts raised through other activities, such as direct sales, raffles, and charitable auctions. Although the precise amount raised by charitable auctions is not known, the charitable auction is a ubiquitous form of fundraising. Even prior to the advent of Internet auctions as a decentralized form of sales, the multiple-good silent auction was a common form of fundraising for churches and other nonprofit organizations. Today they are still commonly used, and a Web search for "silent auction" will generate over 1.4 million hits, indicating that they are certainly not rare. Despite the frequent use of this auction institution, silent auctions are a relatively new area of research, but one that is certainly deserving of study. The primary purpose of this article is to investigate and evaluate the performance of the silent auction using data from three naturally occurring fundraising auctions (two from a church, one from a private school) and from a series of six laboratory sessions. Although our ultimate goal will be to examine such standard benchmarks as revenue and efficiency, along the way this requires us to consider other attributes of silent auctions, such as the propensity of individuals to raise their own bid or to submit "jump" bids (bids in excess of the minimum required increment). The theoretical anomaly of jump bidding will be a major component of the investigation. Finally, we will compare our field and experimental results, asking whether our experimental design can serve as a useful test for further auction design research in the area of charity silent auctions. It should be noted that the silent auction competes as a potential fundraising mechanism not only against other types of auctions but also against nonauction institutions, such as direct contributions or lotteries. We hope that the results we present will inform that discussion, but a comparison with nonauction processes is not a part of this article (and it should be noted that mechanism choice may depend on many things in addition to revenue). (1) Section II of this article provides a report on the silent auctions and the data that are the basis for the empirical analysis in the paper. Section III presents several organizing models that might provide a useful reference for bidding strategies within the silent auction. Section IV presents analyses of the field data, including both descriptive statistics and formal estimation. Section V presents the design and results of a series of controlled laboratory experiments motivated by the silent auction. Section VI compares the field and experimental results. Section VII offers a summary and some thoughts on additional research on silent auctions. II. THE SILENT AUCTION AND DATA OBTAINED FOR THIS STUDY The silent auction, like any auction, is a collection of attributes of the bidders, the items for sale, and the rules for the auction. The following are attributes of a typical silent auction. * There are multiple goods at auction. * All items are displayed to all bidders, each of whom is free to bid on any number of the items. * The auctions are held simultaneously for all goods and close according to a common clock (or, in another variant, to a random device, such as the burning down of a candle). * The auctions are "silent" oral ascending auctions, that is, there is no auctioneer; each bidder writes his or her new (higher) bid on the item's bidding sheet. …