Studies on the calibration of subjective probabilities find that people tend to over-estimate the precision of their knowledge. In this paper we develop a semi-rational model and apply it to the real estate markets in Hong Kong and other Asian countries. The key point is that a person is...

Since liquidation and bankruptcy are costly, researchers have tried to find out why the claimants of a troubled firm do not work out a deal to avoid these costs. In this article we show that if a creditor has to deal with multiple borrowers who might default, it may be optimal for the creditor...

The paper examines the risk-and-return characteristics of a popular development strategy, the presale system (or sale before completion), used in many Asian cities. We model a presale decision in a real-options framework and suggest that the use of presale is primarily for a risk-sharing...

This article derives a closed-form solution for an equilibrium real options exercise model with stochastic revenues and costs for monopoly, duopoly, oligopoly and competitive markets. Our model also allows one option holder to have a greater production capacity than others. Under a monopolistic...

The persistence of excess vacancy has long been documented in the literature. We propose that, because vacant land does not produce income, there is a tendency for developers to build whenever they can identify a development opportunity. Since developers have to compete with each other for the...

We analyze the prices of owner-occupied housing in 97 metropolitan areas between 1980 and 2011. Our tests indicate that price changes exhibit positive serial correlation at the one year intervals, with subsequent reversals of price changes over longer intervals. Consistent with our simple model,...

[abstract missing - contribution appeared in the programme]