On Seller Estimates and Buyer Returns

Gershkov, Alex and Toxvaerd, Flavio (February 2006): On Seller Estimates and Buyer Returns. SFB/TR 15 Discussion Paper No. 143

Abstract

This paper revisits recent empirical research on buyer credulity in arts auctions and auctions for assets in general. We show that elementary results in auction theory can fully account for some stylized facts on asset returns that have been held to suggest that sellers of assets can exploit buyers by providing biased estimates of asset values. We argue that, rather than showing that buyers are credulous, the existing evidence can serve as an indirect test of the rationality assumptions underlying auction theory.

• Item Type: Paper
• Keywords: Auctions, information disclosure, seller manipulation, buyer credulity
• Faculties: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > A3 - Markt- und Auktionsdesign in komplexen Umgebungen
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D44, D82, G12, G14
• Language: English