Progress 07/01/06 to 06/30/09
Outputs
OUTPUTS: There were two major activities completed during the past year. First, we have conducted the experimental sessions of the auction design and are now in the process of analyzing the data. Second, we have generated first stage findings based on the experimental results and are now processing additional data from the field auctions. PARTICIPANTS: Tigran Melkonyan, Associate Professor, Department of Resource Economics, UNR Michael Price, Assistant Professor, Department of Economics, University of Tennessee Jens Schubert, Graduate Student, Department of Resource Economics, UNR Yiheng Li, Graduate Student, Department of Resource Economics, UNR TARGET AUDIENCES: State and BLM officials responsible for the allocation and pricing of the state's natural resources. Participants in auctions organized by BLM and other stakeholders. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period. PARTICIPANTS: Tigran Melkonyan, Associate Professor, Department of Resource Economics, UNR Michael Price, Assistant Professor, Department of Economics, University of Tennessee Jens Schubert, Graduate Student, Department of Resource Economics, UNR Yiheng Li, Graduate Student, Department of Resource Economics TARGET AUDIENCES: State and BLM officials responsible for the allocation and pricing of the state's natural resources. Participants in auctions organized by BLM and other stakeholders. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
We have completed the designed economic experiments to examine various auction mechanisms. We compared the findings from two different auction mechanisms - RTC and Sequential. The results reveal that the laboratory sessions are useful because it is possible to eliminate any common-value motivations and also systematically vary the amount of information bidders have about others' values. In the field setting, a simple change to the protocol, not announcing the price at which the good is sold will diminish the ability of bidders to learn about values of others. With this change in protocol only the winner will gain specific information on prices (since the price is set by the second highest bidder), and losing bidders will not learn more than that their bid was not the highest. We hypothesize that eliminating the possibility of learning about others values will move to bidding more consistent with the existing theoretical predictions. Results from this project help identify the factors that influence the allocation (and sale price) of public lands under the Southern Nevada Public Land Management Act and assess whether and how BLM can alter the manner in which it auctions public lands to maximize the benefits received by the relevant stakeholders.
Publications
- No publications reported this period
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Progress 01/01/08 to 12/31/08
Outputs
OUTPUTS: There were three major activities completed during the past year. First, we have developed a theoretical model of auction design that accommodates various aspects of the SNPLMA land auctions. Second, we have refined the empirical framework to analyze the data on winning bids for land auctions conducted as part of the Southern Nevada Public Land Management Act and has completed that part of the analysis. Third, we have finalized all treatments of the economic experiments and started the student recruitment process. We have continued the training and professional development of two graduate students in the Department of Resource Economics (Jens Schubert and Yiheng Li). Both graduate students are still involved in running the experiments and data analysis. PARTICIPANTS: Tigran Melkonyan, Associate Professor, Department of Resource Economics, UNR Michael Price, Assistant Professor, Department of Economics, University of Tennessee Jens Schubert, Graduate Student, Department of Resource Economics, UNR Yiheng Li, Graduate Student, Department of Resource Economics, UNR TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
We have developed novel theoretical and empirical models to analyze SNPLMA land auctions. We have also designed economic experiments to examine various auction mechanisms. Results from this project will help identify the factors that influence the allocation (and sale price) of public lands under the Southern Nevada Public Land Management Act and assess whether and how BLM can alter the manner in which it auctions public lands to maximize the benefits received by the relevant stakeholders.
Publications
- No publications reported this period
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Progress 01/01/07 to 12/31/07
Outputs
OUTPUTS: There were two major activities completed during the past year. The first is that the data on winning bids for land auctions conducted as part of the Southern Nevada Public Land Management Act has been analyzed. The second major activity is that experiments designed to examine alternate methods to organize the sale of natural resources such as public lands or wild horses have been piloted and human subjects approval to begin running these experiments has been received. Preliminary findings from these activities were presented to the advisory board for the College of Agriculture, Biotechnology and Natural Resources this past spring.
PARTICIPANTS: During the past year, informal collaboration with Dr. Andreas Lange in the Department of Agricultural and Resource Economics at the University of Maryland occurred. Professor Lange aided in the design of experiments and is using insights from empirical work on the SNPLMA land auctions to develop new theory to explain bidder behavior in such environments. In addition, the training and professional development of two graduate students in the Department of Resource Economics (Jens Schubert and Yiheng Li) was provided by this project. Both graduate students have been involved in running the experiments and data analysis.
Impacts
The major finding for the past calendar year arose from the analysis of winning bids for SNPLMA land auctions. Data from these auctions suggest a fundamental relationship between housing prices in the Las Vegas area and the propensity for winning bids to pool at the announced reserve price (or minimum allowable bid). Importantly, in periods when housing prices are stagnant (or declining), there is a noticable increase in the number of auctions where parcels go unsold or sell for a price equal to the reserve. Such outcomes are consistent with recent theoretical advances in the economics literature examining the impact of reserve prices on auctions where bidders have the opportunity to resell the good on secondary markets.
Publications
- No publications reported this period
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Progress 01/01/06 to 12/31/06
Outputs
An important goal of this project was to collect historical data on the structure of BLM sales in the state of Nevada to better understand the factors that influence the allocation (and sale price) of the state's natural resource. To date, project investigators have collected historical data on winning bids and announced reserve prices (minimum allowable bids) for land sales conducted under the Southern Nevada Public Land Management Act for the period 1999-2006. Preliminary analysis of the data highlights an interesting pattern of behavior: the probability that the winning bidder submits a bid equal to the reserve price is inversely related to the growth rate of property values in southern Nevada. The observed data patterns are remarkably consistent with the predictions of theoretical models that examine bidder behavior in auction markets with announced reserve prices and resale possibilities. This literature highlights that the optimal reserve price in such
environments is substantially lower than those considered in traditional models. Furthermore, this literature shows that auction revenues are significantly reduced when sellers fail to account for resale possibilities and announce reserve prices that are above the optimal level. As winning bidders in SNPLMA land sales have the opportunity to subdivide and sell parcels on a secondary market, it is important to determine whether the observed data patterns are driven by resale possibilities and changes in underlying land values rather than alternate explanations. Unfortunately, the existing data does not allow one to parse between alternative models of behavior and determine the optimal reserve price and format in SNPLMA land sales. Using the existing data as a guide, project investigators have designed and piloted controlled experimental auctions intended to provide a better understanding of bidder behavior in SNPLMA sales and test the performance of alternate auction formats.
Recruiting for these experimental auctions is ongoing and it is anticipated that the first set of experimental treatments will be completed by the end of the Spring 2007 semester.
Impacts
Results from this project will help identify the factors that influence the allocation (and sale price) of public lands under the Southern Nevada Public Land Management Act and assess whether and how BLM can alter the manner in which it auctions public lands to maximize the benefits received by the relevant stakeholders.
Publications
- No publications reported this period
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