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Article: Market sentiments, winner's curse and bidding outcome in land auctions

TitleMarket sentiments, winner's curse and bidding outcome in land auctions
Authors
KeywordsAuction
Bidding outcome
Market sentiments
Winner's curse
Issue Date2011
PublisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638
Citation
Journal of Real Estate Finance and Economics, 2011, v. 42 n. 3, p. 247-274 How to Cite?
AbstractThis paper empirically tests auction theory by examining how the stock market evaluates the outcome of open-bid English auctions of rights to develop residential real estate projects in Hong Kong. To do so, we deconstruct the complexity surrounding actual auction events, and empirically isolate the influence of conflicting auction theory predictions using data from expert opinion around auction events, actual auction event and outcome data, and stock market data. The empirical findings include (1) with increasing uncertainty bidders reduce bids, thus confirming predictions following the winner's curse thesis; (2) joint bidding does not lead to increased bids based on pooled ("better") information, but instead leads to reduced competition; while increased competition leads to increased prices at auction, as expected; (3) the market interprets auction outcomes as information events which function to signal developers' expectations about future market prospects; but if the winning bid is considered too high, this interpretation is revised to that of the winner's curse; (4) with joint bidding and winning, the market's response to joint winners is better explained by concern for winner's curse (despite supposed better informed bids) than the acquisition of a below cost development project following reduced competition at auction; and (5) the market interprets increased competition at auction as indicator of the future direction of property price movements in the secondary market-the more intense the competition, the more positive the future prospect of the property market are seen to be. © 2009 Springer Science + Business Media, LLC.
Persistent Identifierhttp://hdl.handle.net/10722/168782
ISSN
2015 Impact Factor: 0.698
2015 SCImago Journal Rankings: 1.144
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorTse, MKSen_HK
dc.contributor.authorPretorius, FIHen_HK
dc.contributor.authorChau, KWen_HK
dc.date.accessioned2012-10-08T03:32:24Z-
dc.date.available2012-10-08T03:32:24Z-
dc.date.issued2011en_HK
dc.identifier.citationJournal of Real Estate Finance and Economics, 2011, v. 42 n. 3, p. 247-274en_HK
dc.identifier.issn0895-5638en_HK
dc.identifier.urihttp://hdl.handle.net/10722/168782-
dc.description.abstractThis paper empirically tests auction theory by examining how the stock market evaluates the outcome of open-bid English auctions of rights to develop residential real estate projects in Hong Kong. To do so, we deconstruct the complexity surrounding actual auction events, and empirically isolate the influence of conflicting auction theory predictions using data from expert opinion around auction events, actual auction event and outcome data, and stock market data. The empirical findings include (1) with increasing uncertainty bidders reduce bids, thus confirming predictions following the winner's curse thesis; (2) joint bidding does not lead to increased bids based on pooled ("better") information, but instead leads to reduced competition; while increased competition leads to increased prices at auction, as expected; (3) the market interprets auction outcomes as information events which function to signal developers' expectations about future market prospects; but if the winning bid is considered too high, this interpretation is revised to that of the winner's curse; (4) with joint bidding and winning, the market's response to joint winners is better explained by concern for winner's curse (despite supposed better informed bids) than the acquisition of a below cost development project following reduced competition at auction; and (5) the market interprets increased competition at auction as indicator of the future direction of property price movements in the secondary market-the more intense the competition, the more positive the future prospect of the property market are seen to be. © 2009 Springer Science + Business Media, LLC.en_HK
dc.languageengen_US
dc.publisherSpringer New York LLC. The Journal's web site is located at http://springerlink.metapress.com/openurl.asp?genre=journal&issn=0895-5638en_HK
dc.relation.ispartofJournal of Real Estate Finance and Economicsen_HK
dc.subjectAuctionen_HK
dc.subjectBidding outcomeen_HK
dc.subjectMarket sentimentsen_HK
dc.subjectWinner's curseen_HK
dc.titleMarket sentiments, winner's curse and bidding outcome in land auctionsen_HK
dc.typeArticleen_HK
dc.identifier.emailTse, MKS: ktse@hku.hken_HK
dc.identifier.emailPretorius, FIH: fredpre@hku.hken_HK
dc.identifier.emailChau, KW: hrrbckw@hku.hken_HK
dc.identifier.authorityTse, MKS=rp01101en_HK
dc.identifier.authorityPretorius, FIH=rp01018en_HK
dc.identifier.authorityChau, KW=rp00993en_HK
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1007/s11146-009-9211-1en_HK
dc.identifier.scopuseid_2-s2.0-79953108810en_HK
dc.identifier.hkuros181167-
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-79953108810&selection=ref&src=s&origin=recordpageen_HK
dc.identifier.volume42en_HK
dc.identifier.issue3en_HK
dc.identifier.spage247en_HK
dc.identifier.epage274en_HK
dc.identifier.eissn1573-045X-
dc.identifier.isiWOS:000288801100001-
dc.publisher.placeUnited Statesen_HK
dc.identifier.scopusauthoridTse, MKS=7103352647en_HK
dc.identifier.scopusauthoridPretorius, FIH=35616801000en_HK
dc.identifier.scopusauthoridChau, KW=24830082500en_HK
dc.identifier.citeulike6037504-
dc.customcontrol.immutablesml 130725-

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