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Experimental analysis of a land assembly mechanism

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  • Chaturvedi, Rakesh
  • Kanjilal, Kiriti

Abstract

Market mechanisms for land assembly problems suffer from a holdout problem and coercive legal solutions like eminent domain introduce new inefficiencies. A new mechanism that is not fully market-based but attempts price discovery is proposed, experimentally studied and is shown to improve efficiency. The mechanism is fully specified by two parameters - a percentile value of the empirical distribution of ask-prices that serves as a trading threshold for the buyer and a quantum of penalty to be applied to landowners who bid relatively very high. In a 2 × 2 treatment, it is found that reducing the trading threshold and increasing the penalty improves the efficiency performance.

Suggested Citation

  • Chaturvedi, Rakesh & Kanjilal, Kiriti, 2021. "Experimental analysis of a land assembly mechanism," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 91(C).
    • Handle: RePEc:eee:soceco:v:91:y:2021:i:c:s2214804321000203
    DOI: 10.1016/j.socec.2021.101680
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    References listed on IDEAS

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    Cited by:

    1. Soumendu Sarkar, 2022. "Strategyproof and Budget Balanced Mechanisms for Assembly," Working papers 320, Centre for Development Economics, Delhi School of Economics.

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    More about this item

    Keywords

    Land assembly; Holdout; Experiments;
    All these keywords.

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • H13 - Public Economics - - Structure and Scope of Government - - - Economics of Eminent Domain; Expropriation; Nationalization
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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