The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions?

Daniel Hellerstein and Nathaniel Higgins

Agricultural and Resource Economics Review, 2010, vol. 39, issue 2, 17

Abstract: Conservation programs faced with limited budgets often use a competitive enrollment mechanism. Goals of enrollment might include minimizing program expenditures, encouraging broad participation, and inducing adoption of enhanced environmental practices. We use experimental methods to evaluate an auction mechanism that incorporates bid maximums and quality adjustments. We examine this mechanism’s performance characteristics when opportunity costs are heterogeneous across potential participants, and when costs are only approximately known by the purchaser. We find that overly stringent maximums can increase overall expenditures, and that when quality of offers is important, substantial increases in offer maximums can yield a better quality-adjusted result.

Keywords: Institutional and Behavioral Economics; Land Economics/Use (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions? (2010)
Working Paper: The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:arerjl:90850

DOI: 10.22004/ag.econ.90850

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