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Right-to-choose auctions: A field study of water markets in the limari valley of chile

  • Jonathan Alevy
  • Oscar Cristi
  • Oscar Melo

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.

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Paper provided by The Field Experiments Website in its series Framed Field Experiments with number 00117.

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Date of creation: 2010
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Handle: RePEc:feb:framed:00117
Contact details of provider: Web page: http://www.fieldexperiments.com

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