A study of zero-out auctions: testbed experiments of a process of allocating private rights to the use of public property

Kemal Güler, Charles R. Plott, Quang H. Vuong

    Research output: Contribution to journalArticle

    Abstract

    This paper applies an experimental testbed methodology to the evaluation of a proposed mechanism for allocating the right to land at the New York airports. The mechanism is called a "zero-out auction" because it is supposed to allocate the rights efficiently like an auction while leaving all of the consumer's surplus with the buyers (as opposed to allocating some to the seller as would be the case with an ordinary auction). A new behavioral hypothesis is introduced to account for limited rationality of individuals and unusual behaviors of the process. The axiom, called the unbiased expectations hypothesis, does a good job of modeling individual behavior in the context of a game model.

    Original languageEnglish (US)
    Pages (from-to)67-104
    Number of pages38
    JournalEconomic Theory
    Volume4
    Issue number1
    DOIs
    StatePublished - Jan 1994

    Keywords

    • Experiments
    • airport slots
    • auctions
    • landing rights
    • policy

    ASJC Scopus subject areas

    • Economics and Econometrics

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