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

Published online by Cambridge University Press:  15 September 2016

Jonathan E. Alevy ,
Oscar Cristi  and
Oscar Melo
Jonathan E. Alevy
Affiliation:
Department of Economics at the University of Alaska in Anchorage, Alaska
Oscar Cristi
Affiliation:
Fellow at Centro de Investigación en Empresas y Negocios (CIEN) at the Universidad del Desarrollo in Santiago, Chile
Oscar Melo
Affiliation:
Department of Agricultural Economics at Pontificia Universidad Catolica de Chile in Santiago, Chile
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Abstract

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.

Keywords

water marketfield experimentauction design
Type
Contributed Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 2 , April 2010 , pp. 213 - 226
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

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