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An Analysis of Charity Auctions and Punching Martin Shkreli

Martin Shkreli is a name not commonly associated with charity, Mr. Shkreli revered as the most hated man in America by many, was behind price hikes exponentially increasing the cost of the life-saving medications of his company. However, last month he made an endearing proposition on twitter to auction off a “slap/punch” to benefit the family of his recently deceased friend.


While his tweet is not fully explicit on the terms of his auction it can generally be assumed from the tweet that the punch/slap will be awarded to the bidder with the highest bid like a first price sealed bid auction. The rewards of this auction include the satisfaction of charitably donating money to someone in need and getting to exact a personal vendetta against Shkreli hand to face. In this scenario, it would be logical for a Shkreli despising bidder to bid slightly lower than their personal value for the punch because it is a first price auction and there is no room for personal profit bidding their value. It would also be sensible for those bidders to subtract certain costs associated with this face punch such as transportation, camera crew, etc. to maintain profit. While I don’t think that the winner would be able to get any tax deductions from this exchange the satisfaction from the punch might be almost as valuable to certain people. However later into this auction, he announced the first and second highest bids of $78,000 and $25,000 breaking the original format and changing it more akin to an ascending price auction. This was a move made intentionally by Shkreli to try to raise more money hoping someone with a higher personal value than $78,000 would bid and win using this additional information. This highlights that while Shkreli has been operating under questionable legality, he is still thinking economically and trying to benefit his friend’s family as much as possible.


These types of unconventional charity auctions have been gaining some traction in recent years and organizations like Charitybuzz have taken advantage of this. Offering unique interactions with celebrities and exclusive memorabilia they have been able to generate sizeable amounts of money for a wide variety of charities. Similarly to Shkreli, this organization offered these opportunities online, and through auctions, they raised funds with prizes such as having coffee with Apple CEO Tim Cook at Apple’s headquarters and a private tennis lesson with Rafael Nadal. These auctions in particular match people with unique experiences that they would pay large amounts of money for, benefiting good causes. Charity auctions are not a new idea and have existed in smaller capacities in charities where trivial and fun things are auctioned off for donations at dinners or conventions, but abetted by modern technology charity auctions are permeating into the world of celebrities and escalating. Auctions are a great way of matching people with goods and services they value and charity auctions serve as a great and engaging way to raise money for charitable organizations using auctions with trivial rewards opposed to typical donating.



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October 2016