Article ID Journal Published Year Pages File Type
7348548 Economics Letters 2018 5 Pages PDF
Abstract
Time-on-market is often interpreted as a negative signal of an asset's quality. The lengthier the time-on-market, the greater the probability that past buyers arrived, observed some undesirable quality, and chose not to buy. In this paper, I propose a simple model of quality, price, and time-on-market. The model yields closed-form expressions for beliefs, prices, and rates of sale. To demonstrate the accessibility of the model, I work out simple comparative statics for time-on-market and sale price and extend the model by giving the seller a valuable outside option.
Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
Authors
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