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Using laboratory experiments for policymaking: An example from the Georgia irrigation reduction auction
Author(s) -
Cummings Ronald G.,
Holt Charles A.,
Laury Susan K.
Publication year - 2004
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.20007
Subject(s) - bidding , legislature , state (computer science) , institution , environmental economics , economics , computer science , microeconomics , political science , law , algorithm
In recent years, interest has been growing in policy applications of different auction systems. This paperreports a series of experiments that were used to design and implement an auction in a unique policymakingenvironment. In April 2000, the Georgia legislature passed a law that mandated that the state hold an auction indrought years to pay some farmers to suspend irrigation. This paper reports the results of laboratoryexperiments state policymakers used to determine the auction institution that would be used to fulfill therequirements of this new law. Experimental results are compared with farmers' bidding behavior in thestate‐run irrigation auction used to reduce water usage in Georgia. © 2004 by the Association forPublic Policy Analysis and Management.