Information Access, Conservation Practice Choice, and Rent Seeking in Conservation Procurement Auctions: Evidence from a Laboratory Experiment

Abstract

AbstractExisting research emphasizes the sensitivity of conservation auction performance and bidder behavior to auction design choices, as these auctions are not incentive compatible, meaning rent seeking must be controlled. Procuring agencies must decide how to provide bidders with information about the environmental quality of different conservation practices to manage the trade‐off between an increased probability of selecting the optimal practice and increased rent‐seeking behavior associated with this information. We use an induced‐value laboratory experiment to explore how access to quality information and variation in the bid‐submission protocol can best be combined to improve auction performance. We find that the auction performs best when a bid‐menu format, in which participants submit bids for all their practices, is combined with information about the environmental quality rank of available conservation practices.