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Timing of Bids at Pooled Real Estate Auctions

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  • Vanderporten, Bruce
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    Abstract

    When many similar properties are being auctioned, auctioneers often resort to the pooled design. The winning bidder of a given round is given a choice among all the unclaimed (pooled) properties. Bidding strategy depends on expectations of rival bidders' behavior as well as personal valuation. Anecdotal evidence from condominium auctions suggests that bidding decisions can produce price anomalies. This study develops a simple theoretical model with three active bidders and three units for sale to show how such anomalies may emerge. Estimation is then made of a hedonic price model using data from a condominium auction of 53 units on three separate dates. The empirical results support the view that the best buys are found in the middle of the auction with over-payments at the beginning and end. Copyright 1992 by Kluwer Academic Publishers

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    Bibliographic Info

    Article provided by Springer in its journal Journal of Real Estate Finance & Economics.

    Volume (Year): 5 (1992)
    Issue (Month): 3 (September)
    Pages: 255-67

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    Handle: RePEc:kap:jrefec:v:5:y:1992:i:3:p:255-67

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    Web page: http://www.springerlink.com/link.asp?id=102945

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    Cited by:
    1. Ashenfelter, Orley & Genesove, David, 1992. "Testing for Price Anomalies in Real-Estate Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 501-05, May.
    2. Seow Eng Ong, 2006. "Price Discovery in Real Estate Auctions: The Story of Unsuccessful Attempts," Journal of Real Estate Research, American Real Estate Society, vol. 28(1), pages 39-60.
    3. Kathryn Graddy & Orley Ashenfelter, 2002. "Auctions and the Price of Art," Economics Series Working Papers 131, University of Oxford, Department of Economics.
    4. Paulo Klinger Monteiro & Flavio Menezes, 1999. "Synergies and Price Trends in Sequential Auctions," Microeconomics 9901002, EconWPA, revised 03 Feb 1999.
    5. Flavio Marques Menezes & Richard Engelbrecht-Wiggans, 2001. "Why do Bidders Drop Out from a Sequential Auction," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 55(1), pages 33-51, January.
    6. Ashenfelter, Orley C & Graddy, Kathryn, 2002. "Art Auctions: A Survey of Empirical Studies," CEPR Discussion Papers 3387, C.E.P.R. Discussion Papers.
    7. Mark G. Dotzour & Everard Moorhead & Daniel T. Winkler, 1998. "The Impact of Auctions on Residential Sales Prices in New Zealand," Journal of Real Estate Research, American Real Estate Society, vol. 16(1), pages 57-72.
    8. Engelbrecht-Wiggans, Richard & Kahn, Charles M., 1999. "Calibration of a model of declining prices in cattle auctions," The Quarterly Review of Economics and Finance, Elsevier, vol. 39(1), pages 113-128.
    9. Gerard Marty & Raphaele Preget, 2007. "A Socio-economic Analysis of French Public Timber Sales," Working Papers - Cahiers du LEF 2007-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.

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