Clustering in Real Estate Prices: Determinants and Consequences

We examine the determinants and consequences of price clustering. Real estate list and transaction prices exhibit two price-ending characteristics: even (000-ending) and just-below-even (900-ending). The use of even-ending prices is negatively related to the precision of the price estimates and the cost of rounding. However, the tendency to use just-below-even-ending prices is related to the cost of rounding and to listing agency characteristics. The transaction price and the number of days on market are associated with list price clustering and with listing agency characteristics. Most properties are listed at just-below-even-ending prices, but those listed at even-ending prices sell faster and at a higher price. Finally, better transaction outcomes are positively associated with the number of area-properties listed by the seller?s real-estate agency.

Expected Inflation and the Real Rates of Interest on Taxable and Tax-Exempt Bonds.

This paper analyzes the impact of inflation on rates of return on taxable corporate bonds and tax-exempt municipal bonds. The paper considers a differential tax system, where the tax rate depen ds on both the identity of the investor and the source of income. It also consid ers the possibility that inflation may induce investors to switch from holding one asset to holding another. It is demonstrated that while inflation should increase the (pre-personal tax) real rate of interest on taxable bonds, it should reduce the real rate of interest on tax-exempt bonds. Copyright 1987 by Ohio State University Press.

Adverse selection and the market for annuities

Adverse selection is often blamed for the malfunctioning of the annuities market. We simulate the impact of adverse selection on the consumption allocation of annuitants under alternative parameter values, and explore the resulting welfare implications. We show that, for most parameter values, the welfare losses associated with equilibriums that are subject to adverse selection correspond to a loss of wealth of around one percent in a first-best equilibrium. These losses are smaller than the corresponding losses associated with equilibriums with no access to an annuity market by an order of magnitude of ten. The existence of substitutes for annuities such as a bequest motive or a social security system intensifies the adverse selection but reduces its welfare impact. Copyright The Geneva Association 2007Adverse selection, Annuities, Insurance, Information, Social Security reform, Defined Benefits, Defined Contribution, H55, G22, G28,