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Confronting Information Asymmetries: Evidence from Real Estate Markets

  • Mark J. Garmaise
  • Tobias J. Moskowitz
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    This paper studies the role of asymmetric information in commercial real estate markets in the U.S. We propose a novel and exogenous measure of information based on the quality of property tax assessments in different regions. Employing direct and indirect information variables, we find strong evidence that information considerations are significant in this market. We show that market participants resolve information asymmetries by purchasing nearby properties, trading properties with long income histories, and avoiding transactions with informed professional brokers. The evidence that the choice of financing is used to address information concerns is mixed and weak.

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    File URL: http://www.nber.org/papers/w8877.pdf
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    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8877.

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    Date of creation: Apr 2002
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    Publication status: published as Garmaise, Mark J. and Tobias J. Moskowitz. "Confronting Information Asymmetries: Evidence From Real Estate Markets," Review of Financial Studies, 2004, v17(2,Summer), 405-437.
    Handle: RePEc:nbr:nberwo:8877
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