Probability Of Sale Research Articles

The Role of Listing Price Strategies on the Probability of Selling a House: Evidence from Vietnam

AbstractThe aim of this paper is to measure the dynamic effects of listing price strategies and housing features on the probability of selling a house over the marketing period by adopting a two-stage regression analysis. In the first stage, we define the listing price strategies as the gaps between the actual listing price and expected selling price, estimated by a hedonic model. The Cox Probability Hazard models are applied in the second stage to measure the effects of listing price strategies on the probability of sales over various listing periods, such as 30-day, 90-day, 180-day and 270-day listing periods.We find that overpriced listing strategies have a significant impact on the probability of sale at any point during the first 30 days of marketing time. This effect seems to diminish and disappear after six months of marketing time. This shows that the first 30 days of the marketing time are critical and housing liquidity is strongly affected by pricing strategies. When the time on market is over 30 days, the influence of the seller’s pricing decisions on housing liquidity is diminished.

Restrictions versus amenities: the differential impact of home owners associations on property marketability

ABSTRACT Common-interest developments (CIDs) or planned urban developments (PUDs) can include a multitude of property types such as condos, townhomes, coops and single-family residences. Many such developments are privately governed by a homeowners’ association (HOA) and managed by an HOA board of directors comprised of community homeowners. While such communities and their governing bodies have been widely criticised for their onerous rules, regulations and exclusionary practices, many argue that the amenities, benefits and utility afforded to its members provide a large degree of satisfaction for homeowners. In fact, one of the purposes of an HOA is to preserve and enhance home values by creating an environment with minimal negative externalities. Although it is generally assumed that an HOA does add value, these associations have also generated a number of controversial disputes. This paper examines the effects of an HOA on marketability to empirically shed light on the question of whether buyers find HOAs to be beneficial or burdensome. The results show that the impact of the HOA on price, marketing time and probability of sale are not even across price segments and exist even after controlling for the presence of gated communities.

Can Insurance Payouts Prevent a Poverty Trap? Evidence from Randomised Experiments in Northern Kenya

Index-based insurance can have welfare-enhancing effects through two pathways: by inducing policyholders to change their investment and risk-management decisions or by mitigating weather-related shocks through payouts. Most studies fail to distinguish between these two; thus, we know little about which effects dominate and their long-term welfare implications. This study uses a random distribution of discount coupons and drought events that trigger payouts as exogenous variations in order to identify both the ex ante risk-management and ex post payout effects of index-based livestock insurance in a pastoral-dominant society of northern Kenya, where the literature has detected asset-based poverty traps, represented by bifurcated herd-size dynamics. We find that, first, both risk-management and payout effects help reduce the probability of distress sales of livestock. Second, payout effects also reduce the slaughter of livestock. Finally, while payout effects remain robust for the sub-sample of poorer households below the poverty-trap threshold, statistically significant risk-management effects on reduced livestock sales disappear for them. Overall, our results suggest that insurance payouts can help the poor escape poverty traps, while the impact of behavioural changes accompanied by insurance purchases is more subtle in our settings.

Reducing information asymmetry in the auctioning of non-perishable experience goods: The case of online wine auctions

We highlight the importance of reducing the perceived risk associated with information asymmetry for experience goods. We analyse a major online non-perishable experience good, wine, from the seller's perspective. The mechanism for lowering information asymmetry is the verification service offered by the auctioneer. By focusing on unsold items/lots, the wine and auction characteristics affecting the probability of a sale are identified. Results show that the verification of the wine's provenance increases the probability of sale by 5.7 percent and leads to an expected increase of 5.1 percent in the auction price. When both effects are combined, the increase in the expected revenue of the seller is 7.3 percent. We test and find no evidence of selection bias. Given the heterogeneity in wine prices, a quantile regression analysis shows how the results differ for high-priced wines compared to lower priced wines. Results highlight how the mechanisms to lower the degree of information asymmetry work both in attracting bidders to online auctions and encouraging bidders to submit higher bids.

Predviđanje prodaje na platformi e-trgovine, korišćenjem data mining modela

In this paper we applied twinning algorithm for product that are sold via e-commerce platform. To establish relatively homogenous product groups that were on sale on this e-commerce platform during the last year, it was necessary to form predictive mathematical model. We determined set of relevant variables that will represent group attributes, and we applied K-means algorithm, Market Basket model and Vector Distance model. Based on analysis of basic and derived variables, fixed number of clusters was introduced. Silhouette index was used for the purposes of detecting whether these clusters are compact. Using these cluster separations, we created models that detect similar products, and try to analyze probability of sales for each product. Analysis results can be used for planning future sales campaigns, marketing expenses optimization, creation of new loyalty programs, and better understanding customer behavior in general.

A study on the dynamic refund fee model of air tickets based on win-to-win mechanism

Purpose: To achieve the balancing of interests between airlines and passengers, the dynamic refund fee model is designed, which meets the interests of both airlines and passengers.Design/methodology/approach: In the study, the expectation utility function is constructed respectively for passengers and airlines, and the equilibrium point of the two is chosen to solve the passenger refund fee. Then, a dynamic refund fee model based on refund time and real-time sales revenue is proposed according to the actual operating conditions of the flight.Findings:The results show that refund fee is negatively related to three variables, the ticket price, the probability of ticket sales and the probability of refund. Besides, The maximum payment limit is the airline single seat cost or the actual fare paid below it, and the lowest can be exempt.Originality/value: A better standard of the rufund is proposed. The refund mode breaks the traditional static charging mode, and charges different refund fees to passengers for different refund time and the real time income of flights. Comparing with the current refund policy, the new charge of refund fee could best meets the interests of both parties.a refund fee standard.

The Cost of Gun Crime: Evidence from Gun Offender Registry on Housing Values

In this study, we estimate the cost of gun crime using a revealed preference framework by relying on an institutional change in Baltimore City, Maryland, that mandates public disclosure of the gun offender registry. We exploit the sharp localized change in perceived crime risk after gun offenders move into the neighborhood and examine its impact on housing values in the vicinity. Our estimates indicate that houses closest to gun offenders experience 7.1% decline in value ($9,100) after the offenders move in, and the probability of sales is 43% lower. Collectively, public disclosure of a gun offender’s residence costs homeowners around $888 million. We construct a simple model to estimate the cost of gun victimization from these house price discounts. Based on our preferred specification, the cost of gun crime victimization is around $1.5 million and, assuming a 20% fatality rate, the value of statistical fife is approximately $9.0 million.

Destination institutions, firm heterogeneity and exporter dynamics: empirical evidence from China

In this paper we study the effects of destination institutions and firm productivity on exporter dynamics in a heterogeneous firm setting. The empirical results, using a panel of Chinese firms, show that the quality of destination institutions has a significant and positive effect on the probability of entry and survival and that these effects are increasing in firm productivity. In contrast, firms have higher initial sales and faster growth in destinations with weaker institutions and this effect is decreasing in firm productivity. We also find that exporter performances are increasing in firm experience and in the level of foreign ownership whereas the importance of destination institutions is decreasing in firm experience and in the level of foreign ownership. We show that while firms from regions with better institutions enjoy higher probability of entry, initial sales, survival and growth in markets with better institutions; the importance of productivity for exporter performance diminishes as the quality of local institutions improves. Lastly, firms that are more dependent on contract enforcement perform better in entry probability, initial sales, survival and growth in destinations with better institutions.

Local Constant-Quality Housing Market Liquidity Indices

The average time on market (TOM) of sold properties is frequently used by practitioners and policymakers as a market liquidity indicator. This figure might be misleading as the average TOM only considers properties that have been sold. Furthermore, traded properties are heterogeneous. Since these features differ over the cycle, the average TOM could provide wrong signals about market liquidity. These problems are more severe in markets where properties trade infrequently. In this paper, a methodology is provided that allows for the construction of constant-quality housing market liquidity indices in thin markets that can be estimated up to the end of the sample. The latter is particularly important since market watchers are generally interested in the most recent information regarding market liquidity and less in historical information. Using individual transactions data on three different types of Dutch municipalities (small, medium, and large) it is shown that the average TOM overestimates market liquidity in bad times and underestimates market liquidity in good times. The option to withdraw is the most important reason why the average TOM is misleading. Furthermore, constant-quality liquidity leads the average TOM and price changes. The indices not only show that illiquidity is higher during busts, but also that liquidity risk is higher. Additional results suggest that setting a high list price relative to the estimated value results in a higher TOM, but this effect differs over time. Both the list price premium and the effect on sale probability are higher during busts. Differences in housing quality over the cycle, however, also play a significant role. Finally, the method allows for the construction of indices that are more robust to revisions, especially in thinner markets.

Performance bounds for optimal sales mechanisms beyond the monotone hazard rate condition

In mechanism design, Myerson’s classical regularity assumption is often too weak to imply quantitative results about the performance of sales mechanisms. For example, ratios between revenue and welfare, or sales probabilities may vanish at the boundary of Myerson regularity. Therefore, for quantitative results, many authors have resorted to much stronger assumptions such as the monotone hazard rate condition. This motivates us to explore performance bounds for sales mechanisms that follow from a quantitative version of Myerson regularity, which we call λ-regularity. The parameter λ interpolates from Myerson regularity to the monotone hazard rate condition and beyond. We provide four equivalent definitions of the concept. These rely on a growth condition on the virtual valuations function (known as α-strong regularity), a monotonicity condition on a generalized hazard rate, a ρ-concavity condition on survival functions and a comparison relation in the convex transform order. By highlighting the interplay between these different perspectives, we unify previous work in economics, computer science, applied mathematics and statistics. We demonstrate the usefulness of λ-regularity for quantitative mechanism design by proving various performance bounds for sales mechanisms. In addition, we briefly consider applications beyond auctions and mechanism design such as the measurement of inequality in populations.

Bargaining Power and the Choice of Brokerage Contract

The exclusive right to sell listing contract is believed to be preferable to the exclusive agency listing contract because it gives the listing broker more incentive to put effort into the sale of the home and earn a commission. Researchers have developed theory and reported evidence to support that sellers are worse off by choosing the exclusive agency contract because brokers are going to exert less effort. In this study, I frame the question differently by developing a model based on combined bargaining power rather than broker effort and show how the greater potential bargaining power of the exclusive agency contract can impact the selling price, time on market, and probability of sale.

The influence of house, seller, and locational factors on the probability of sale

Ability to model the probability of individual house sales would be of benefit in a number of real estate contexts. Existing housing literature models the probability of a house sale using mainly property characteristics or macroeconomic variables. However, the use of only property characteristics typically yields a poor model fit. This study investigates the relative roles of property characteristics, seller mortgage origination variables, and locational factors in terms of explaining the probability of individual house sales.Homeowner information such as their time horizon of staying in the house and their stage in the life cycle should have an important impact on house sale decisions. Although obtaining such information is typically difficult, mortgage choices made at loan origination may help reveal such information. In addition, the measurable characteristics of neighbors and the geographic clustering of house sales, ceteris paribus, may aid in modeling house sales.Incorporating the property characteristics, mortgage origination variables, and locational factors increases the pseudo-R2 of a probit model from under 1 percent when only using property characteristics to over 23 percent when using property, mortgage, and spatial information. The results are consistent through a particularly large housing cycle in both Las Vegas County in Nevada and Maricopa County in Arizona from 2006 to 2010, and for a variety of sub samples.

Divergence in Reservation Prices and Its Impact on Housing Market Liquidity: A Theoretical Analysis

In this paper, we build a two-period English auction model to study the relative movements between buyers’ and sellers’ reservation prices in the housing market. We show that changes in sellers’ reservation prices are jointly determined by changes in buyers’ reservation prices, probability of buyers offering a high or low price, and the arrival rate of buyers. When the divergence between the buyers’ and sellers’ reservation prices widens, the probability of sale increases in the upward market and decreases in the downward market, contributing to the increases or decreases in market liquidity.

Insider Selling and IPO Price Premium

ABSTRACTWe examine insider selling for initial public offering (IPO) firms using a sample of 1868 IPOs between 1988 and 2012. We find that overvalued IPOs have higher probability of offering secondary shares, higher proportion of secondary shares offered, and more upward revision in the total number of shares offered. They also have higher probability of insider sale in the open market both before and after lockup expiration. The size of insider sale in the open market also increases with the degree of overvaluation. The results are consistent with the hypothesis that IPO insiders try to sell their shares opportunistically into overvalued markets.

Mark-to-Market Accounting and Systemic Risk in the Financial Sector

One of the most contentious issues raised during the recent crisis has been the potentially exacerbating role played by mark-to-market accounting. Many have proposed the use of historical cost accounting, promoting its ability to avoid the amplification of systemic risk. We caution against focusing on the accounting rule in isolation, and instead emphasize the interaction between accounting and the regulatory framework. First, historical cost accounting, through incentives that arise via interactions with complex capital adequacy regulation, does generate market distortions of its own. Second, while mark-to-market accounting may indeed generate fire sales during a crisis, forward-looking institutions that rationally internalize the probability of fire sales are incentivized to adopt a more prudent investment strategy during normal times which leads to a safer portfolio entering the crisis. Using detailed, position- and transaction-level data from the U.S. insurance industry, we show that (a) market prices do serve as ‘early warning signals’, (b) insurers that employed historical cost accounting engaged in greater degrees of regulatory arbitrage before the crisis and limited loss recognition during the crisis, and (c) insurers facing mark-to-market accounting tend to be more prudent in their portfolio allocations. Our identification relies on the sharp difference in statutory accounting rules between life and P&C companies as well as the heterogeneity in implementation of these rules within each insurance type across U.S. states. Rather than promoting a shift away from market-based information, our results indicate that regulatory simplicity may be preferred to the complexity of risk-weighted capital ratios that gives rise, through interactions with accounting rules, to distorted risk-taking incentives and potential build-up of systemic risk.

Housing Crisis Spillover Effects in Areas of High Concentration of Non-primary Residences

Prior research finds that non-primary residences will have higher mortgage default rates and foreclosure rates than first homes. We investigate sub-markets with high concentrations of non-primary residences for differences in price behavior, marketing time, and probability of sale during the recent housing crisis relative to those areas with normal concentrations of non-primary residences. We find that there are significant differences between these areas, with generally greater price declines for those areas with high concentrations of non-primary residences. These price declines are also accompanied by statistically significant changes in marketing time for those homes in high non-primary residence areas.

Does Cheap Talk Affect Market Outcomes? Evidence from eBay

We study cheap talk by firms and responses by their consumers, focusing on unverifiable promises of charitable donations on eBay during 2005–2006. Cheap talk listings have lower sales probabilities but sell at higher prices when successful. The negative relationship between cheap talk and sales is concentrated in the months following Hurricane Katrina, a time when verifiable and unverifiable charity listings increased dramatically. Finally, we show that cheap talk sellers have lower quality ratings than those making verifiable donations. Our results suggest that buyers ( justifiably) avoid cheap talk listings when credible quality signals are available, thus limiting the extent of cheap talk. (JEL D12, D82, D83, L15, L31, M31)

Marketing sensorial: merchandising a través de las emociones en el punto de venta. Análisis de un caso

No siempre se compra de forma racional siendo muchas las ocasiones en las que los consumidores se dejan llevar por emociones, por los sentidos. En este escenario aparece el concepto de marketing sensorial, que responde a la estimulación de los sentidos para intentar incrementar la rentabilidad de los establecimientos comerciales. En el caso del retail se hace uso de distintos colores para identificar secciones, se hace uso de música para aumentar el tiempo de permanencia en un espacio; se potencia un olor agradable para evocar un ambiente envolvente o dar a probar un producto y, de este modo, darlo a conocer aumentando, con ello, la probabilidad de venta. Aquellos establecimientos que ponen en práctica el marketing sensorial suelen obtener resultados muy gratos. En el presente estudio se analiza la puesta en práctica de una serie de sencillas técnicas de marketing sensorial en el caso de una empresa textil española (sevillana) adaptando el modelo de Hulten, Broweus y Van Dijk (2009). Concretamente se aplican tácticas de marketing visual, olfativo y sonoro para analizar las posteriores percepciones y actitudes de los consumidores frente a tres ítems objetivos y medibles como son: el tiempo de permanencia en la tienda, la satisfacción del cliente y el total de ventas del establecimiento.

Dirichlet model: its consistency and tracking pattern using buying behavior data

Dirichlet model is a standard choice for modeling customers’ satisfaction and their preference which make the modeling of their buying behavior possible. In tracking consumers’ behavior pattern with respect to 7up Bottling Company Nig. Plc flavor, Dirichlet model provides theoretical benchmark for price promotions, advertisement, branding as well as been used to decide future purchasing pattern of consumers when it comes to the volume of Pepsi, Mirinda and 7up that they will purchase. This research was carried out based on consistency of Dirichlet model in tracking and forecasting purchasing pattern of customers. This was established through the evidence from variance-covariance matrix, probability vector and parameter vector, stochastic matrix and the probability of sale at the next proposed eight periods for the three flavors. The precision parameter and Bayes factor were used to test the goodness of fit of Dirichlet model so that the estimate of Dirichlet model can be relied upon. The distribution has been fitted to real life datasets for illustrating its practical behavior; based on the evidences from probability of sale at different proposed sales periods, Dirichlet model predicted that the probability of purchase is not stable for one product, but keeps varying from period to period. Only the Mirinda flavor has more stable sales throughout the proposed period with average0.569478 (56.9478%), while Pepsi and 7up have low purchasing probability with average 0.368518 (36.85%) and 0.361292(36.13%), respectively. Therefore, it can be relied on the Dirichlet model for predicting customers buying behavior pattern thereby enhancing efficient and consistent planning and decision making.

Before a Fall: Impacts of Earthquake Regulation on Commercial Buildings

We test whether the major earthquakes in Christchurch (Canterbury, New Zealand) affected prices of earthquake-prone commercial buildings in Wellington, a city that was directly unaffected by the disaster. Specifically, we test whether official declaration of a Wellington building as earthquake-prone (with a requirement for remediation to minimum earthquake code standards) had an effect on sale price relative to similarly earthquake-prone (but yet-to-be-declared) buildings. We find that the price discount accompanying an earthquake-prone declaration in the CBD averages 45% whereas there is no observable discount on buildings yet-to-be-declared as earthquake-prone. Sale prices of currently-declared earthquake-prone commercial buildings in the suburbs also fell, but not as markedly. The sale probability of officially declared earthquake-prone buildings in Wellington rose markedly after the Christchurch earthquakes unlike the sale probability of yet-to-be-declared earthquake-prone buildings which fell slightly, reflecting buyer caution about such buildings. This pattern is indicative of forced sale of buildings following an official earthquake-prone declaration.