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Using laboratory experiments for policymaking: An example from the Georgia irrigation reduction auction

Author

Listed:
  • Ronald G. Cummings

    (Andrew Young School of Policy Studies, Georgia State University)

  • Charles A. Holt

    (University of Virginia, Charlottesville)

  • Susan K. Laury

    (Andrew Young School of Policy Studies, Georgia State University)

Abstract

In recent years, interest has been growing in policy applications of different auction systems. This paper reports a series of experiments that were used to design and implement an auction in a unique policymaking environment. In April 2000, the Georgia legislature passed a law that mandated that the state hold an auction in drought years to pay some farmers to suspend irrigation. This paper reports the results of laboratory experiments state policymakers used to determine the auction institution that would be used to fulfill the requirements of this new law. Experimental results are compared with farmers' bidding behavior in the state-run irrigation auction used to reduce water usage in Georgia. © 2004 by the Association for Public Policy Analysis and Management.

Suggested Citation

  • Ronald G. Cummings & Charles A. Holt & Susan K. Laury, 2004. "Using laboratory experiments for policymaking: An example from the Georgia irrigation reduction auction," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 23(2), pages 341-363.
  • Handle: RePEc:wly:jpamgt:v:23:y:2004:i:2:p:341-363
    DOI: 10.1002/pam.20007
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    File URL: http://hdl.handle.net/10.1002/pam.20007
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    References listed on IDEAS

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    1. David Lucking-Reiley & John A. List, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September.
    2. Goeree, Jacob K. & Holt, Charles A. & Palfrey, Thomas R., 2002. "Quantal Response Equilibrium and Overbidding in Private-Value Auctions," Journal of Economic Theory, Elsevier, vol. 104(1), pages 247-272, May.
    3. Benjamin M. Simon, 1998. "Federal Acquisition Of Water Through Voluntary Transactions For Environmental Purposes," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 422-432, October.
    4. Klemperer, Paul, 1998. "Auctions with almost common values: The 'Wallet Game' and its applications," European Economic Review, Elsevier, vol. 42(3-5), pages 757-769, May.
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