Conservation auctions, collusion and the endowment effect

Arbeitspapier

We contribute to the literature on the optimal design of auction mechanisms for the procurement of nature conservation activities. We use an economic experiment to examine whether the market efficiency of conservation auctions increases or decreases with repetition. Theory predicts that repetition facilitates collusion among sellers in procurement auctions, while behavioral economics suggests that repetition may increase market efficiency because it attenuates the endowment effect - the phenomenon that ownership of a good tends to increase one's valuation of the good. We find that of these two countervailing effects, the latter has the upper hand; average bids decrease monotonically over the consecutive auctions. Since repetition increases market efficiency, conservation contracts can be of shorter duration and procured at a higher frequency than has been suggested before.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Tinbergen Institute Discussion Paper ; No. TI 2018-093/VIII

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Design of Experiments: Laboratory, Individual ; Auctions ; National Government Expenditures and Related Policies: Procurement ; Ecological Economics: Ecosystem Services; Biodiversity Conservation; Bioeconomics; Industrial Ecology
• Thema: Auctions ; procurement ; endowment effect ; collusion ; nature conservation

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Dijk, Justin ; Ansink, Erik ; van Soest, Daniël Pieter
• Ereignis: Veröffentlichung
• (wer): Tinbergen Institute
• (wo): Amsterdam and Rotterdam
• (wann): 2018

Weitere Informationen

• Handle: http://hdl.handle.net/10419/205282
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ