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Agreements Must Be Kept? Residential Leases during Covid-19

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  • Genesove, David
  • Hoffmann, Eran
  • Elster, Yael

Abstract

This paper studies how a Covid-19 lockdown affected residential lease payments. Survey data on 1511 Israeli renter households show nearly one in eight households not paying full rent during the lockdown, with these households holding back, on average, a third of their contractually due rent. Financially fragile households with greater income cuts, and households with leases lacking provisions that effectively provide for damages upon non-payment pay a lower share of contract rent. So do households with more frequent encounters with their landlord, or longer tenure in the apartment. Bargaining and relational contracts theories help explain these results.

Suggested Citation

  • Genesove, David & Hoffmann, Eran & Elster, Yael, 2020. "Agreements Must Be Kept? Residential Leases during Covid-19," CEPR Discussion Papers 15102, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:15102
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    More about this item

    Keywords

    Covid-19; Bargaining; Contract renegotiation; Rental; Relational contracts;
    All these keywords.

    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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