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Environmental and Resource Economics

, Volume 53, Issue 1, pp 137–157 | Cite as

The Effect of Bidder Heterogeneity on Combinatorial Conservation Auction Designs

  • M. S. Iftekhar
  • A. Hailu
  • R. K. Lindner
Article

Abstract

In an iterative combinatorial auction, bidders can submit bids on individual and/or on combinations of projects in a series of intermediate rounds, where bid prices are revised before a final allocation is made. The iterative format is useful for conservation service procurement as landholders can rely on market information revealed through the rounds to evaluate their choices of projects and bid prices. However, there is no single way of providing the market information. Different designs for generating price information have been proposed. Little is known about the performance of iterative combinatorial auction designs when heterogeneous bidders, with different cost structures, participate in an auction. Using an agent based model, we evaluate a selected set of designs under different bidder heterogeneity scenarios. We observe that higher degrees of heterogeneity lead to lower auction efficiency and that auction outcomes are highly sensitive to price feedback design choices.

Keywords

Agent based model Bidder heterogeneity Conservation auction Item price feedbacks Iterative combinatorial auction 

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Copyright information

© Springer Science+Business Media B.V. 2012

Authors and Affiliations

  1. 1.School of Economics and FinanceUniversity of TasmaniaHobartAustralia
  2. 2.School of Agricultural and Resource EconomicsUniversity of Western AustraliaPerthAustralia

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