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Discussion Paper Details

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Title: On Seller Estimates and Buyer Returns

Author(s): Alex Gershkov and Flavio Toxvaerd

Publication Date: October 2007

Keyword(s): Auctions, Buyer credulity, Information disclosure and Seller manipulation

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Gershkov, A and Toxvaerd, F. 2007. 'On Seller Estimates and Buyer Returns'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=6503