IDEAS home Printed from https://ideas.repec.org/a/aea/aejapp/v17y2025i1p459-500.html

Betting on the House: Subjective Expectations and Market Choices

Author

Listed:
  • Nicolas Bottan
  • Ricardo Perez-Truglia

Abstract

Home price expectations play a central role in macroeconomics and finance. However, there is little direct evidence on their effect on market choices. We provide causal evidence using a large-scale, high-stakes field experiment in the United States. We sent letters about home price trends to 57,910 homeowners who listed their homes. These letters contained randomized information creating nondeceptive, exogenous variation in home price expectations. Consistent with economic theory, higher expectations reduced selling probability. Behavior was highly elastic: a 1 percentage point increase in expectations caused a 2.63 percentage point reduction in the probability of selling the property within 12 weeks.

Suggested Citation

  • Nicolas Bottan & Ricardo Perez-Truglia, 2025. "Betting on the House: Subjective Expectations and Market Choices," American Economic Journal: Applied Economics, American Economic Association, vol. 17(1), pages 459-500, January.
    • Handle: RePEc:aea:aejapp:v:17:y:2025:i:1:p:459-500
    DOI: 10.1257/app.20230641
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/doi/10.1257/app.20230641
    Download Restriction: no
    File URL: https://doi.org/10.3886/E196421V1
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20230641.appx
    Download Restriction: no
    File URL: https://www.aeaweb.org/doi/10.1257/app.20230641.ds
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    File URL: https://libkey.io/10.1257/app.20230641?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aejapp:v:17:y:2025:i:1:p:459-500. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.