Asymmetric Information and List Price Reductions in the Housing Market

Tinbergen Institute Discussion Paper 10-038/3

29 Pages Posted: 15 Apr 2010

See all articles by Erik R. de Wit

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); IZA Institute of Labor Economics; Tinbergen Institute

Multiple version iconThere are 2 versions of this paper

Date Written: April 10, 2010

Abstract

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.

Keywords: Time-On-The-Market, Duration Analysis, Transaction Prices, Selectivity

JEL Classification: C41, D82, R21, R31

Suggested Citation

de Wit, Erik R. and van der Klaauw, Bas, Asymmetric Information and List Price Reductions in the Housing Market (April 10, 2010). Tinbergen Institute Discussion Paper 10-038/3. Available at SSRN: https://ssrn.com/abstract=1589295 or http://dx.doi.org/10.2139/ssrn.1589295

Erik R. De Wit (Contact Author)

University of Amsterdam - Finance Group ( email )

Roetersstraat 11
1018 WB Amsterdam
Netherlands
+31205255414 (Phone)
+31205255285 (Fax)

HOME PAGE: http://www.abs.uva.nl/pp/edewit

Tinbergen Institute

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HOME PAGE: http://www.tinbergen.nl

Bas Van der Klaauw

VU University Amsterdam - Department of Economics ( email )

De Boelelaan 1105
1081 HV Amsterdam
Netherlands
+31 20 444 6120 (Phone)
+31 20 444 6005 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

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