‘Smarter Information, Smarter Consumers’? Insights into the Housing Market

47 Pages Posted: 27 Mar 2019

See all articles by Cynthia M Gong

Cynthia M Gong

School of Business and Economics, Loughborough University

Colin Lizieri

University of Cambridge - Department of Land Economy

Helen X. H. Bao

University of Cambridge - Department of Land Economy

Date Written: November 1, 2018

Abstract

This study explores how information helps housing consumers make informed decisions and discusses potential market outcomes. We analyse the interaction between the disclosure of information on property conditions and the disparity between home sellers’ willingness to accept (WTA) and home buyers’ willingness to pay (WTP). Three hypotheses are derived and validated through field experimental investigation within the property market. We find that the WTA–WTP disparity exists. The discussed policy instrument for information disclosure appears to function as expected. The WTA–WTP disparity is considerably reduced after information disclosure, and market liquidity and efficiency are improved. This study is an important complement to prior research on how information changes the behaviour of consumers in housing markets. Findings can inform the central government about the wide use of smart disclosure in the near future, as well as the scope, format and structure of information to be supplied to general housing consumers.

Keywords: Information disclosure, WTA–WTP disparity, Nudge, Loss aversion, Housing market

JEL Classification: D03, D81, D82, R3

Suggested Citation

Gong, Cynthia and Lizieri, Colin M. and Bao, Helen X. H., ‘Smarter Information, Smarter Consumers’? Insights into the Housing Market (November 1, 2018). Available at SSRN: https://ssrn.com/abstract=3296586 or http://dx.doi.org/10.2139/ssrn.3296586

Cynthia Gong

School of Business and Economics, Loughborough University ( email )

Epinal Way
Leics LE11 3TU
Leicestershire
United Kingdom

Colin M. Lizieri

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://www.landecon.cam.ac.uk/staff/profiles/clizieri.htm

Helen X. H. Bao (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

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