Balancing Complexity and Rent-Seeking in Multi-Attribute Conservation Procurement Auctions: Evidence from a Laboratory Experiment

• Main Authors: Banerjee, Simanti, Conte, Marc N
• Format: Conference Proceeding
• Language: English
• Published: 2017
• Edition: 2054
• Subjects: Research Methods/Statistical Methods
• DOI: 10.22004/ag.econ.266293

Conservation procurement auctions are implemented under conditions that deviate from those assumed to derive predictions of bidder behavior. Existing research has emphasized the sensitivity of auction performance and bidder behavior to auction design choices. In the conservation context, 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 utilize 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 nd that the auction performs best when a bid-menu format, in which subjects submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.