Premium
Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment
Author(s) -
Banerjee Simanti,
Conte Marc N.
Publication year - 2018
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aay064
Subject(s) - common value auction , incentive , quality (philosophy) , unique bid auction , microeconomics , meaning (existential) , business , procurement , vickrey–clarke–groves auction , information asymmetry , computer science , environmental economics , auction theory , marketing , economics , psychology , philosophy , epistemology , psychotherapist
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.