Predicting the performance of conservation tenders when information on bidders's costs is limited

Steven Schilizzi and Uwe Latacz-Lohmann

No 48171, 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia from Australian Agricultural and Resource Economics Society

Abstract: Buying environmental services from private landholders using tendering mechanisms are usually subject to a budget constraint. Auction theory has mostly focused on target-constrained auctions and is not well developed for this type of auction. This paper examines the predictive capacity of a simple model developed for budget-constrained tenders, already used to design new conservation programs, by submitting it to controlled lab experiments. We study the capacity of the model to predict both experimental bids and the performance of the auction institution, based on the kind of limited information typically available to a conservation agency. We conclude there exists an optimal level of information on bidders’ costs, neither too large nor to small, making the tender worth considering as a policy option as well as allowing an ex-ante assessment of its economic performance.

Pages: 39
Date: 2009
New Economics Papers: this item is included in nep-cta and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aare09:48171

DOI: 10.22004/ag.econ.48171

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