Optimal reserve prices for land auctions in Eastern Germany

Kionka, Marlene; Mußhoff, Oliver; Ritter, Matthias; Uhlemann, Jan-Philip Rado; Odening, Martin

doi:10.1080/13504851.2022.2140752

Cited by 1 publication

(1 citation statement)

References 7 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…For example, Yang and Peng 16 analyze bidding strategies in a random limit auction using non-cooperative game theory and obtain Nash equilibrium bidding strategies in differential form. In a study of land auctions in eastern Germany, a structural estimation approach is applied to determine reserve prices and to compare the resulting expected revenues with actual revenues 17 . On the other hand, some studies investigate land auction mechanism design, including bidding strategies.…”

Section: Literature Reviewmentioning

confidence: 99%

Boundedly rational bidding decision for land auctions during the transformation of real estate markets

Liao,

Zhang,

Tan

et al. 2023

Sci Rep

View full text Add to dashboard Cite

Real estate developers in China exhibit different boundedly rational behaviors when bidding in different land auction formats, resulting in deviation from fully rational bidding, and the transformation of China’s real estate industry has intensified this deviation. To address this problem, this study establishes a reference utility model and a subjective decision probability model under the framework of incomplete information game to characterize developers’ utility distortion and winning probability distortion in open-bid auctions and sealed-bid auctions for land, respectively. The results show that the deviation between bounded rational bidding and fully rational bidding increases as developer competition intensifies. The equilibrium bidding of cost-disadvantaged developers in the boundedly rational model deviates less from the standard model. Moreover, in sealed-bid auctions, the "hiding degree" of cost-advantaged developers is greater, showing size effects, while the bids in open-bid auctions are more complex and affected by market conditions and developers’ risk preferences. Thus, this study characterizes boundedly rational bidding in land auctions and interprets the deviation from fully rational bidding, which can provide a more real basis for land auction mechanism design.

show abstract

Section: Literature Reviewmentioning

confidence: 99%