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Valuing Goods Allocated via Dynamic Lottery

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  • Carson Reeling
  • Valentin Verdier
  • Frank Lupi

Abstract

Resource managers often use “dynamic lotteries” to allocate access to recreational opportunities. Under these lotteries, applicants’ probability of winning access increases with their seniority, earned by being unsuccessful in past drawings. Winning access means forfeiting one’s seniority. Hence, applicants under a dynamic lottery face intertemporal trade-offs in making their application choices and have incentives to be forward-looking. We use a structural dynamic discrete choice model to estimate willingness to pay (WTP) for black bear hunting opportunities in Michigan, permits for which are allocated via dynamic lottery. We show that forward-looking behavior has important implications for welfare estimation. We also extend prior work by deriving a theoretically consistent measure of applicants’ marginal WTP for quality characteristics of lottery-rationed goods.

Suggested Citation

  • Carson Reeling & Valentin Verdier & Frank Lupi, 2020. "Valuing Goods Allocated via Dynamic Lottery," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(4), pages 721-749.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/709142
    DOI: 10.1086/709142
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    Cited by:

    1. Kim, Yusun & Reeling, Carson & Widmar, Nicole J.O. & Lee, John G., 2023. "Estimating a model of forward-looking behavior with discrete choice experiments: The case of lifetime hunting license demand," Journal of choice modelling, Elsevier, vol. 47(C).
    2. Holzer, Jorge & McConnell, Kenneth, 2023. "Extraction rights allocation with liquidity constraints," Resource and Energy Economics, Elsevier, vol. 71(C).
    3. David Scrogin, 2023. "Estimating risk and time preferences over public lotteries: Findings from the field and stream," Journal of Risk and Uncertainty, Springer, vol. 67(1), pages 73-106, August.

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