Confronting Information Asymmetries: Evidence from Real Estate Markets
Mark J. Garmaise
University of California, Los Angeles (UCLA) - Anderson School of Management
Tobias J. Moskowitz
University of Chicago - Booth School of Business; AQR Capital; National Bureau of Economic Research (NBER)
NBER Working Paper No. w8877
This paper studies the role of asymmetric information in commercial real estate markets in the U.S. We propose a novel and exogenous measure of information based on the quality of property tax assessments in different regions. Employing direct and indirect information variables, we find strong evidence that information considerations are significant in this market. We show that market participants resolve information asymmetries by purchasing nearby properties, trading properties with long income histories, and avoiding transactions with informed professional brokers. The evidence that the choice of financing is used to address information concerns is mixed and weak.
Number of Pages in PDF File: 46
Date posted: April 4, 2002
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