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The Effective Use of Limited Information: Do Bid Maximums Reduce Procurement Cost in Asymmetric Auctions
- 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.
- Author(s):
-
Hellerstein, Daniel , Higgins, Nathaniel
- Subject(s):
-
conservation programs , econometric models , cost analysis , Conservation Reserve Program , land use , landowners
- Description:
- Includes references
- Source:
- Agricultural and resource economics review 2010 Apr., v. 39, no. 2
- Language:
- English
- Year:
- 2010
- Collection:
-
Journal Articles, USDA Authors, Peer-Reviewed
- File:
-
Download [PDF]
- Rights:
- Works produced by employees of the U.S. Government as part of their official duties are not copyrighted within the U.S. The content of this document is not copyrighted.
