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Right-to-Choose Auctions: A Field Study of Water Markets in the Limari Valley of Chile

Author

Listed:
  • Jonathan E. Alevy

    (Department of Economics, University of Alaska Anchorage)

  • Oscar Cristi

    (CIEN, Universidad del Desarrollo)

  • Oscar Melo

    (Department of Agricultural Economics, Pontificia Universidad Catolica de Chile)

Abstract

Field experiments were conducted with farmers in the Limarí 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.

Suggested Citation

  • Jonathan E. Alevy & Oscar Cristi & Oscar Melo, 2010. "Right-to-Choose Auctions: A Field Study of Water Markets in the Limari Valley of Chile," Working Papers 2010-04, University of Alaska Anchorage, Department of Economics.
    • Handle: RePEc:ala:wpaper:2010-04
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    References listed on IDEAS

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    Cited by:

    1. Messer, Kent D. & Murphy, James J., 2010. "FOREWORD: Special Issue on Experimental Methods in Environmental, Natural Resource, and Agricultural Economics," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 39(2), pages 1-4, April.
    2. John List, 2021. "2021 Summary Data of Artefactual Field Experiments Published on Fieldexperiments.com," Artefactual Field Experiments 00749, The Field Experiments Website.
    3. John List, 2022. "2021 Summary Data of Natural Field Experiments Published on Fieldexperiments.com," Natural Field Experiments 00747, The Field Experiments Website.
    4. Alison Watts, 2018. "Generalized Second Price Auctions over a Network," Games, MDPI, vol. 9(3), pages 1-11, September.
    5. Charles A. Holt & Cathleen A. Johnson & Courtney A. Mallow & Sean P. Sullivan, 2012. "Water Externalities: Tragedy of the Common Canal," Southern Economic Journal, John Wiley & Sons, vol. 78(4), pages 1142-1162, April.
    6. Jonathan E. Alevy & Julianna Butler & Michael Price, 2016. "Multi-good Demand in Bidder's Choice Auctions: Experimental Evidence from the Lab and the Field," Working Papers 2016-01, University of Alaska Anchorage, Department of Economics.

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    Keywords

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    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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