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A Lemons “Mirage”: Erroneous Perceptions Of Asymmetric Information In The Market For Arizona Ranchettes, Matthew G. Nagler, Daniel E. Osgood

Mountain Plains Journal of Business and Technology

Owners of modest-sized,recreation-oriented ranch properties, known as “ranchettes,” appear to judge a key characteristic of the quality of their properties, the extent of vegetative “greenness,” based on their own observation,despite the greater reliability of publicly available climate data. The discrepancy between personal observation and public data is perceived erroneously by owners as reflecting an information asymmetry that favors the former. The consequence of this misperception is adverse selection: transplant owners, who are not familiar with long-term local weather patterns from direct observation, delay the sale of properties that are greener during their term of ownership. Econometric evidence is presented from …