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Cooling Auction Fever: Evidence from the Housing Market

Antonio Gargano & Marco Giacoletti

The Review of Financial Studies2026https://doi.org/10.1093/rfs/hhaf101article
FT50UTD24AJG 4*ABDC A*
Weight
0.50

Abstract

We study the effects of underquoting, the practice of setting listing prices below sellers’ reservation values, on housing auctions. Laws introduced in Australia to deter underquoting lead to higher listing prices, but also to declines in sales prices and sales probabilities. We develop a quantitative model to formalize predictions under different assumptions about bidders’ information and rationality. The effects of the laws are matched by a version of the model in which participating bidders overbid. While both behavioral biases arising during the auction and switching costs can explain overbidding, empirical and survey evidence points to behavioral biases as the main mechanism.

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https://doi.org/https://doi.org/10.1093/rfs/hhaf101

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@article{antonio2026,
  title        = {{Cooling Auction Fever: Evidence from the Housing Market}},
  author       = {Antonio Gargano & Marco Giacoletti},
  journal      = {The Review of Financial Studies},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1093/rfs/hhaf101},
}

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.