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The magnitude of the coefficient for the low-strength subsample suggests that for each dollar that the ask price exceeds the estimate of the computer's value, the highest offer for that computer is higher by 36 cents.
The coefficient on the interaction term also suggests that the impact of the ask price varies depending on market strength.
In this section we assess the effect of the ask price on time to sale.
The right-hand-side variable of interest is the log-difference between the ask price and the computer's value.
At the means, the magnitude of the coefficient suggests that a one-standard-deviation increase in the log-difference between the ask price and the computer's value is associated with a nine-percentage-point fall in the probability that it remains on the exchange.
The coefficient on the log-difference between the ask price and the computer's value is significant in the specification without the interaction term.
TABLE 3 Effect of Ask Price on Offers Market Strength Variable All Value 0.
These models all yield a unique ask price for a given set of model parameters.
In their model, ask prices are binding, but the intuition would still apply as long as setting a higher ask price deterred low-valuation buyers from making offers.
To see this, suppose a seller with a high ask price has a high reservation price, because he or she has a good outside option or is inclined to keep the computer.
Using the ratio of the ask price to value (without logs) yielded qualitatively identical results.
Our test explicitly examines the effect of the ask price on the highest outstanding offer and therefore tests whether offers are more likely to be rejected by high-ask price sellers.