12 Oct 2011

All-in-Auctions -- the video

Five students at Wageningen helped me make this video demonstrating the All-in-Auction.

This explanation is the fifth sixth means of explaining the AiA (joining the powerpoint, academic paper, public lecture, book, and Solutions Journal explanations), so I hope that people can now start to experiment with using the AiA to reallocate water (for efficiency) while recognizing existing property rights (for equity).


Morten said...

Good demonstration. But surely the price of water should be 4 in this example - ie the highest losing bid.

David Zetland said...

@ Morten -- good point, but it's supposed to be LESS than an accepted bid. If we had decimal bids (e.g., 4.10 4.02, 4.0 accepted), then the price would be, e.g., 3.98 (highest rejected bid) -- as "second price auctions" specify as a means to protect some consumer utility.

Wayne Bossert said...

David: I'm working on the design of an AiA for one of our high priority areas and have my spreadsheet completed. My question is auction participation. Can anyone bid in the auction or must bidding be restricted only to those who contribute units? I can see a case where an outside environmental group may want to bid for units - to retire the water use or pump it to a stream or whatever. Or an industry that may be interested in the area for a new facility. Of course, the ability of these extra players to obtain water units may alternatively scare off the most obvious local players. Or can it be organized either way?

David Zetland said...

@Wayne -- good question. I'd start with current water users. They can then invite outsiders to bid for upto capped % of total water. Also note that I recommend an annual AiA to maximize flexibility. People get nervous when it's a permanent sale.

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