Door-in-the-face heuristics: Intermediaries’ diversion in rental markets

This paper investigates how intermediaries with information advantages divert consumer search in rental markets and lead to inefficient outcomes. Using unique data on tenants’ initial preferences and property-visit records, we find that intermediaries deliberately prioritize the exhibition of properties distant from tenants’ preferences in their property-showing sequences and divert the visit route toward unsolicited properties. Moreover, such diversion patterns are dynamically adjusted according to the instantaneous feedback from tenants. By using diversion strategies to affect and project consumers’ preferences and willingness to pay, intermediaries can benefit from two channels, i.e., 1) distorting transaction outcomes and achieving higher commissions and 2) facilitating deals for less-favorable properties. We also provide evidence for the successive approximations of intermediaries’ diversion strategies and their implications for tenant discrimination.