Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment

20 Pages Posted: 21 Apr 2020

See all articles by Simanti Banerjee

Simanti Banerjee

affiliation not provided to SSRN

Marc Conte

University of California, Santa Barbara (UCSB) - Department of Economics

Date Written: October 2018

Abstract

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.

Keywords: Information asymmetry, iterative auctions, multiā€attribute auctions, payment for ecosystem services programs

Suggested Citation

Banerjee, Simanti and Conte, Marc, Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment (October 2018). American Journal of Agricultural Economics, Vol. 100, Issue 5, pp. 1407-1426, 2018, Available at SSRN: https://ssrn.com/abstract=3578928 or http://dx.doi.org/10.1093/ajae/aay064

Simanti Banerjee (Contact Author)

affiliation not provided to SSRN

Marc Conte

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

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