Eres : Digital Library : Works

Paper eres2014_29:
The Winnerís Curse, Price Anchors and Bidder Characteristics: Evidence from Successful Residential Real Estate Auctions

id eres2014_29
authors Ryan, Paul; Clare Branigan, Cal Muckley
year 2014
title The Winnerís Curse, Price Anchors and Bidder Characteristics: Evidence from Successful Residential Real Estate Auctions
source 21st Annual European Real Estate Society Conference in Bucharest, Romania
summary This paper explores the impact of behavioral biases, specifically the winnerís curse and anchoring and insufficient adjustment on auction outcomes in the Dublin residential real estate market in the period immediately preceding the peak of what became the biggest property crash in recent history in the developed world. In addition, we investigate whether the incidence of these biases is conditioned by two bidder characteristics, his/ her gender and whether the winning bidder is experienced in the residential real estate market. We find that bidders do not shade their auction bids to avoid the winnerís curse, and that auction outcomes are driven by bidder anchoring on the advertised auction guide price, and also the initial auction bid announced by the auctioneer, and are less influenced by the comparable sales prices of similar properties or prices derived from a hedonic asset pricing model. In addition, we find, contrary to expectations, that female bidders are no less prone to behavioural biases in decision making than their male counterparts and that winning experienced bidders, despite their level of expertise, tend on average to pay more for comparable properties than their less experienced counterparts. Our results in aggregate can be interpreted as being consistent with a market where behavioral biases play a part in driving auction prices and are consistent with the arguments made by Shiller (2007, 2008) in his analysis of the US sub- prime crisis.
series ERES:conference
email Paul.ryan@ucd.ie
more http://library.eres.org/cgi-bin/rsa98.pl?conf=ERES2014&type=session&theme=D &slot=2630
discussion No discussions. Post discussion ...
ratings
session D : Housing Markets & Economics
last changed 2014/10/21 21:51
HOMELOGIN (you are user _anon_367404 from group guest) Powered by SciX Open Publishing Services 1.002