Asymmetric Information and List Price Reductions in the Housing Market
Erik R. De Wit
University of Amsterdam - Finance Group; Tinbergen Institute
Bas Van der Klaauw
VU University Amsterdam - Department of Economics; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA); Tinbergen Institute
April 10, 2010
Tinbergen Institute Discussion Paper 10-038/3
In housing markets with asymmetric information list prices may signal unobserved properties of the house or the seller. Asymmetric information is the starting point of many models for the housing market. In this paper, we estimate the causal effect of list-price reductions to test for the presence of asymmetric information. We use very rich and extensive administrative data from the Netherlands. Our empirical results show that list-price reductions significantly increase the probability of selling a house, but also the rate of withdrawal from the market increases.
Number of Pages in PDF File: 29
Keywords: Time-On-The-Market, Duration Analysis, Transaction Prices, Selectivity
JEL Classification: C41, D82, R21, R31working papers series
Date posted: April 15, 2010
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