Can a simple model predict complex bidding behaviour? Repeated multi-unit conservation auctions.

Buying environmental services from private landholders using auction mechanisms often involves repeated multi-unit procurement-type auctions. These can either be target-constrained or budget-constrained. Most of the theoretical literature has focused on the former, whereas government agencies have, for conservation purposes, mainly implemented the latter. This paper examines the predictive power of a simple model previously developed for budget-constrained auctions, in comparison to that of the more standard and more complex target-constrained auction model. Experiments carried out in Germany and Australia lend credibility to the nonstandard and simpler budget-constrained model