Where, When and How Do Sophisticated Investor Respond to Flood Risk?

While the empirical evidence on the pricing of flood risk exposure in residential real estate held by uninformed households is mixed, this study shows that sophisticated investors in commercial real estate markets rationally respond to heightened flood risk by bidding down the prices of exposed assets. Using a detailed property-level database on commercial real estate transactions completed in New York, Boston, and Chicago before and after the shift in the salience of flood risk caused by Hurricane Sandy, we document that properties exposed to flood risk experience slower price appreciation after the storm than equivalent unexposed properties. We further show that: the price effect is not driven by physical damage incurred from Hurricane Sandy, nor by concurrent unrelated pricing trends for waterfront property; it persists through time, suggesting it does not reflect a temporary overreaction that is subsequently reversed; it is driven by higher risk premiums for exposed properties; and it is exacerbated by contagion from locally important occupiers

Turning up the heat: The impact of indoor temperature on selected cognitive processes and the validity of self-report

Indoor climate interventions are often motivated from a worker comfort and productivity perspective. However, therelationship between indoor climate and human performance remains unclear. We assess the effect of indoor climate factorson human performance, focusing the effects of indoor temperature ondecision processes. Specifically, we expect heat tonegatively influence higher cognitive rational processes, forcing people to rely more on intuitive shortcuts. In a laboratorysetting, participants (N=257) were exposed to a controlled physical environment with either a hot temperature (28ºC) or aneutral temperature (22ºC), in which a battery of validated test were conducted. Heat exposure did not lead to a differencein decision quality. We did find evidence for a strong gender difference in self-report, such that only men expect that hightemperature leads to a significant decline in performance, which does not in fact materialize. These results cast doubt on thevalidity of self-report as a proxy for performance under different indoor climate situations

Spatial Dependence in International Office Markets

This paper investigates spatial dependence in the prices of office buildings in Hong Kong, London, Los Angeles, New York City, Paris, and Tokyo for 2007 to 2013. Compared to prior literature, we find low economic impact from spatial dependence in all six markets, and spatial and spatial-temporal dependence do not moderate the effects of hedonic characteristics statistically or economically. However, investor and seller types as well as neighborhood location have a significant impact on the economic and statistical significance of the spatial and spatial-temporal parameters. Spatial office price indices for London, Paris and Tokyo decline somewhat more than do hedonic indices during the crisis