On Seller Estimates and Buyer Returns

Flavio Toxvaerd and Alex Gershkov

No 6503, CEPR Discussion Papers from C.E.P.R. Discussion Papers

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.

Keywords: Auctions; Buyer credulity; Information disclosure; Seller manipulation (search for similar items in EconPapers)
JEL-codes: D44 D82 G12 G14 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-cul
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Journal Article: On seller estimates and buyer returns (2013)
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