Review of Finance 2026

How perception affects house prices: evidence from failed auctions

Kristle Cortés¹; Mandeep Singh²; David H. Solomon³; Philip E. Strahan^3,4

¹ UNSW Business School, UNSW Sydney, Kensington , NSW 2052, · ² University of Sydney Business School, University of Sydney , Darlington, NSW 2006, · ³ Carroll School of Management, Boston College, Chestnut Hill, MA 02467, · ⁴ NBER

Abstract

In the Australian real estate market, about a third of properties are sold at auction. Properties that fail auctions sell later for a 1.3 percent discount. Consistent with a causal channel, the effect holds with property-level fixed effects and when auction failure is instrumented by adverse weather or seller overvaluation. Prices cluster below round numbers, and the discount fades over time, inconsistent with our effects reflecting unobserved property characteristics. The evidence suggests that there are behavioral factors affecting the valuations of buyers and sellers.

DOI

10.1093/rof/rfag003

Language

en

Sources

crossref openalex

Cite

APA 7 MLA 9 Chicago (author–date) Harvard Elsevier Harvard (JFE, JBF…) The Accounting Review Academy of Management American Marketing Association INFORMS (Management Science) Copy citation Copied ✓