Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings are consistent with prospect theory and help explain the positive price-volume correlation in real estate markets.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
8143.
Length: Date of creation: Mar 2001 Date of revision: Publication status: published as Genesove, David and Christohper Mayer. "Loss Aversion And Seller Behavior: Evidence From The Housing Market," Quarterly Journal of Economics, 2001, v116(4,Nov), 1233-1260. Handle: RePEc:nbr:nberwo:8143
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Find related papers by JEL classification: L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Amemiya, Takeshi, 1980.
"Selection of Regressors,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(2), pages 331-54, June.
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