Multi-agent Bargaining under Asymmetric Information: Retrofitting an Elevator

Marcus Asplund, David Genesove

Research output: Contribution to conferencePaperResearch

Abstract

It is well know that asymmetric information might lead to underprovision of public goods. To test the theoretical prediction, we study the decision to retrofit an elevator into an old apartment building, in which each owner has to agree on how the investment cost is split. The asymmetric information aspect is due to partly unobserved individual valuations of an elevator. We tailor Hellwig (2003) to the features of the retrofitting problem and use this to predict which building characteristics should make it easier for owners to agree. Data from Copenhagen broadly support the model's predictions. We use transaction data to estimate the market value of an elevator and conclude that for approximately 30-40 percent of the buildings without an elevator the aggregate increase in value exceeds the investment cost.
It is well know that asymmetric information might lead to underprovision of public goods. To test the theoretical prediction, we study the decision to retrofit an elevator into an old apartment building, in which each owner has to agree on how the investment cost is split. The asymmetric information aspect is due to partly unobserved individual valuations of an elevator. We tailor Hellwig (2003) to the features of the retrofitting problem and use this to predict which building characteristics should make it easier for owners to agree. Data from Copenhagen broadly support the model's predictions. We use transaction data to estimate the market value of an elevator and conclude that for approximately 30-40 percent of the buildings without an elevator the aggregate increase in value exceeds the investment cost.

Conference

Conference7th European Meeting of the Urban Economics Association
Number7
LocationThe Royal Library
CountryDenmark
CityCopenhagen
Period26/05/201727/05/2017
Internet address

Bibliographical note

CBS Library does not have access to the material

Cite this

Asplund, M., & Genesove, D. (2017). Multi-agent Bargaining under Asymmetric Information: Retrofitting an Elevator. Paper presented at 7th European Meeting of the Urban Economics Association, Copenhagen, Denmark.
Asplund, Marcus ; Genesove, David. / Multi-agent Bargaining under Asymmetric Information : Retrofitting an Elevator. Paper presented at 7th European Meeting of the Urban Economics Association, Copenhagen, Denmark.31 p.
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Asplund, M & Genesove, D 2017, 'Multi-agent Bargaining under Asymmetric Information: Retrofitting an Elevator' Paper presented at, Copenhagen, Denmark, 26/05/2017 - 27/05/2017, .

Multi-agent Bargaining under Asymmetric Information : Retrofitting an Elevator. / Asplund, Marcus; Genesove, David.

2017. Paper presented at 7th European Meeting of the Urban Economics Association, Copenhagen, Denmark.

Research output: Contribution to conferencePaperResearch

TY - CONF

T1 - Multi-agent Bargaining under Asymmetric Information

T2 - Retrofitting an Elevator

AU - Asplund,Marcus

AU - Genesove,David

N1 - CBS Library does not have access to the material

PY - 2017

Y1 - 2017

N2 - It is well know that asymmetric information might lead to underprovision of public goods. To test the theoretical prediction, we study the decision to retrofit an elevator into an old apartment building, in which each owner has to agree on how the investment cost is split. The asymmetric information aspect is due to partly unobserved individual valuations of an elevator. We tailor Hellwig (2003) to the features of the retrofitting problem and use this to predict which building characteristics should make it easier for owners to agree. Data from Copenhagen broadly support the model's predictions. We use transaction data to estimate the market value of an elevator and conclude that for approximately 30-40 percent of the buildings without an elevator the aggregate increase in value exceeds the investment cost.

AB - It is well know that asymmetric information might lead to underprovision of public goods. To test the theoretical prediction, we study the decision to retrofit an elevator into an old apartment building, in which each owner has to agree on how the investment cost is split. The asymmetric information aspect is due to partly unobserved individual valuations of an elevator. We tailor Hellwig (2003) to the features of the retrofitting problem and use this to predict which building characteristics should make it easier for owners to agree. Data from Copenhagen broadly support the model's predictions. We use transaction data to estimate the market value of an elevator and conclude that for approximately 30-40 percent of the buildings without an elevator the aggregate increase in value exceeds the investment cost.

M3 - Paper

ER -

Asplund M, Genesove D. Multi-agent Bargaining under Asymmetric Information: Retrofitting an Elevator. 2017. Paper presented at 7th European Meeting of the Urban Economics Association, Copenhagen, Denmark.