Testing for Price Anomalies in Real Estate Auctions

Abstract

This p^)er r^»rts on the results of an auction sale of 83 aondcminium apartment units in New Jersey. At the auctiOTi every unit was hammered dcvm, but, unknown to the 2,348 registered bidders, 40% of the sales fell throuc^. Prices in the subsequent sale of oondaninium 'onits in face to face negotiatioTS resulted in identical units selling for 13% less than they fetched at auction and the discount was largest for those units haininered dcwn early in the auction. These results are inccaTsistent with the usual predictions from the theory of cannon value aucticxis and suggest that uninformed bidders in this auction may have been the subject of a "winner's curse" v*iich generated considerable profit for the seller.The authors are eiffiliated with Princetai Iftiiversity and the Natiaial Bureau of Econcndc Research (Ashenfelter) and MIT (Genesove) . This p^jer is a preliminary r^»rt of the results of a larger study of condcDdnium real estate aucticxis and was prepared for presentaticsi at the

Bidders' Choice Auctions: Raising Revenues through the Right to Choose

“…He also shows that the ascending right to choose auction in which the seller doesn't disclose which item is sold at the first stage raises more revenue than the conventional A-RTC auction. Finally, Burguet (2002) demonstrates that prices decline in successive stages of the A-RTC auction (see also Gale and Hausch, 1994), as observed empirically (Ashenfelter and Genesove, 1992).…”

“…According to the web-site of another real-estate auctioneer, "this type of bidding is very popular when selling building lots, time-shares, and condominiums," 2 see also Ashenfelter and Genesove (1992). In this paper, we investigate why sellers may wish to employ bidders' choice or "right-to-choose" auctions.…”

Assignment of Purchases to Suppliers through a Reverse Auction with Multiple Offers of Lots

“…This process can be done with total security since the ordination criteria has been the average unit price. In a practical implementation it only remains that after supervision in search of anomalies [1], [13], the orders by the suppliers are grouped and these are sent per mail or through another service TCP/IP.…”

Auctioning the Right to Choose When Competition Persists

“…Section 4 expands the model by assuming that each bidder draws the identity of his most-highly-valued asset from a common distribution that favors a particular asset, below called the "usual"favorite. The 1 Our limited knowledge of all three examples stems primarily from private correspondence with participants in these markets; we have no data on the relative frequency of the rightto-choose format. The bank-branch sales involve a lengthy sequence of phone calls that correspond fairly closely to a series of Alternating Recognition auctions (Harstad and Rothkopf 2000).…”

“…As the number of branches sold typically is well in excess of the number of purchasing banks, clearly acquirers of some prime locations persist to compete for others. 1 To illuminate persistent competition in right-to-choose auctions, we model the polar case: winning a right-to-choose not only leaves all bidders in competition, but all bidders, including the one now choosing an asset, have undiminished values (relative to the initial auction round) for any assets still in competition.…”