CID Graduate Student and Research Fellow Working Paper No. 35, May 2009

Auctioning Conservation Contracts in Indonesia - Participant Learning in Multiple Trial Rounds

B. Kelsey Jack

A publication of CID's Sustainability Science Program

Abstract

This paper examines bid adjustments across multiple trial rounds to identify learning by participants in a procurement auction for conservation contracts in Indonesia. Outcomes from previous rounds show an effect on adjustment in subsequent rounds, which is significantly different from predictions under simulated random bidding. This pattern indicates systematic incorporation of information into bid formation, consistent with learning. Individual bidding variability decreases with repetition, consistent with the discovery of a common value component to the auctioned conservation contract. Implications for future implementation of conservation auctions in developing countries and directions for future research are discussed.

Keywords: conservation contract, auction, learning, developing country, non-market goods

JEL codes: Q15, Q21, D44, D82, D83

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