The owner sells the property after the announcement but


A parcel of land in a commercial district is worth $500,000, but the city unexpectedly announces plans to rezone the land for residential use, in which case its value is $300,000. The owner sells the property after the announcement but before the rezoning occurs. How much would a buyer pay if she expects to prevail in a claim for compensation with probability .5? What is the resulting loss to the seller from the zoning change?

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Econometrics: The owner sells the property after the announcement but
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