Information asymmetry, ranchettes, econometric models, perceived distribution


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 the analysis of 694 ranchette sales in Yavapai County, Arizona during 1991-2000. The results demonstrate that the efficiency of the market mechanism is affected not just by the actual distribution of information on quality, but by its perceived distribution.

Please note: You will need a PDF reader to view this file.

Included in

Business Commons



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.