151. Right-to-Choose Auctions: A Field Study of Water Markets in the Limari Valley of Chile
- Author
-
Jonathan E. Alevy, Oscar Cristi, and Oscar Melo
- Subjects
TheoryofComputation_MISCELLANEOUS ,jel:C93 ,Economics and Econometrics ,Sequential auction ,water market, field experiment, auction design, Farm Management, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy, Risk and Uncertainty ,auction design, field experiments,water market ,Field (Bourdieu) ,05 social sciences ,jel:D44 ,TheoryofComputation_GENERAL ,04 agricultural and veterinary sciences ,Bidding ,Microeconomics ,Extant taxon ,Water market ,0502 economics and business ,040103 agronomy & agriculture ,Economics ,0401 agriculture, forestry, and fisheries ,Revenue ,Common value auction ,jel:Q25 ,050202 agricultural economics & policy ,Agronomy and Crop Science - Abstract
Field experiments were conducted with farmers in the Limari Valley of Chile to test extant theory on right-to-choose auctions. Water volumes that differed by reservoir source and time of availability were offered for sale by the research team. The auctions were supplemented by protocols to elicit risk and time preferences of bidders. We find that the right-to-choose auctions raise significantly more revenue than the benchmark sequential auction. Risk attitudes explain a substantial amount of the difference in bidding between auction institutions, consonant with received theory. The auction bidding revealed distinct preferences for water types, which has implications for market re-design.
- Published
- 2010