TY - JOUR
T1 - Information access, conservation practice choice, and rent seeking in conservation procurement auctions
T2 - Evidence from a laboratory experiment
AU - Banerjee, Simanti
AU - Conte, Marc N.
N1 - Funding Information:
Marc N. Conte ([email protected]) is associate professor, Department of Economics, Fordham University. Simanti Banerjee is assistant professor, Department of Agricultural Economics, University of Nebraska, Lincoln. The authors would like to thank James Keeler for his valuable research assistance, two anonymous reviewers, Dr. Timothy Beatty for his editorial support and audiences at seminars organized by Colorado State University and the University of Wyoming and the annual ASSA Conference in Philadelphia in 2018. Funding is gratefully acknowledged from USDA NIFA Grant 2016-67023-24642.
Funding Information:
The authors would like to thank James Keeler for his valuable research assistance, two anonymous reviewers, Dr. Timothy Beatty for his editorial support and audiences at seminars organized by Colorado State University and the University of Wyoming and the annual ASSA Conference in Philadelphia in 2018. Funding is gratefully acknowledged from USDA NIFA Grant 2016-67023-24642.
Publisher Copyright:
© The Author(s) 2018. Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association. All rights reserved.
PY - 2018/10
Y1 - 2018/10
N2 - Existing research emphasizes the sensitivity of conservation auction performance and bidder behavior to auction design choices, as these auctions are not incentive compatible, meaning rent seeking must be controlled. Procuring agencies must decide how to provide bidders with information about the environmental quality of different conservation practices to manage the trade-off between an increased probability of selecting the optimal practice and increased rent-seeking behavior associated with this information. We use an induced-value laboratory experiment to explore how access to quality information and variation in the bid-submission protocol can best be combined to improve auction performance. We find that the auction performs best when a bid-menu format, in which participants submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.
AB - Existing research emphasizes the sensitivity of conservation auction performance and bidder behavior to auction design choices, as these auctions are not incentive compatible, meaning rent seeking must be controlled. Procuring agencies must decide how to provide bidders with information about the environmental quality of different conservation practices to manage the trade-off between an increased probability of selecting the optimal practice and increased rent-seeking behavior associated with this information. We use an induced-value laboratory experiment to explore how access to quality information and variation in the bid-submission protocol can best be combined to improve auction performance. We find that the auction performs best when a bid-menu format, in which participants submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.
KW - Information asymmetry
KW - Iterative auctions
KW - Multi-attribute auctions
KW - Payment for ecosystem services programs
UR - http://www.scopus.com/inward/record.url?scp=85061578646&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85061578646&partnerID=8YFLogxK
U2 - 10.1093/ajae/aay064
DO - 10.1093/ajae/aay064
M3 - Article
AN - SCOPUS:85061578646
SN - 0002-9092
VL - 100
SP - 1407
EP - 1426
JO - American Journal of Agricultural Economics
JF - American Journal of Agricultural Economics
IS - 5
ER -