Learning in a “Basket of Crabs”: An Agent-Based Computational Model of Repeated Conservation Auctions

Auctions are increasingly being considered as a mechanism for allocating conservation contracts to private landowners. This interest is based on the widely held belief that competitive bidding helps minimize information rents. This study constructs an agentbased model to evaluate the long term performance of conservation auctions under settings where bidders are allowed to learn from previous outcomes. The results clearly indicate that the efficiency benefits of one-shot auctions are quickly eroded under dynamic settings. Furthermore, the auction mechanism is not found to be superior to fixed payment schemes except when the latter involve the use of high prices. 1 [email protected] and [email protected]. 35 Stirling Highway, Crawley WA 6009, Australia. Ph: +61 8 938