Testing for Price Anomalies in Real Estate Auctions
This paper reports on the results of an auction sale of 83 condominium apartment units in New Jersey. At the auction every unit was hammered down, but, unknown to the 2,348 registered bidders, 40% of the sales fell through. Prices in the subsequent sale of condominium units in face to face negotiations resulted in identical units selling for 13% less than they fetched at auction and the discount was largest for those units hammered down early in the auction. These results are inconsistent with the usual predictions from the theory of common value auctions and suggest that uninformed bidders in this auction may have been the subject of a "winner's curse" which generated considerable profit for the seller.
|Date of creation:||Mar 1992|
|Date of revision:|
|Publication status:||published as Papers and Proceedings, AER (American Economic Review), May 1992, p.501-505vol. 82, no. 2|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Vanderporten, Bruce, 1992. "Timing of Bids at Pooled Real Estate Auctions," The Journal of Real Estate Finance and Economics, Springer, vol. 5(3), pages 255-67, September.
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American Economic Review,
American Economic Association, vol. 81(1), pages 362-69, March.
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- Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
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