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

Daniel Hellerstein and Nathaniel Higgins

MPRA Paper from University Library of Munich, Germany

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: conservation auctions; Conservation Reserve Program; CRP; bid caps; experimental economics (search for similar items in EconPapers)
JEL-codes: C91 D44 Q58 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-cta, nep-env, nep-exp and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published in Agricultural and Resource Economics Review 39.2(2010): pp. 288-304

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Related works:
Journal Article: The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions? (2010)
Journal Article: 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:pra:mprapa:25268

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