Energy labels, misreporting, and heuristic hedonic models

We propose that home buyers and sellers rely on “heuristic hedonic models”: simplified representations of properties' utility‐bearing attributes. We test this hypothesis using public administrative data from France, where properties' (continuous) estimated energy consumption is summarized by a (discrete) energy label on a scale from A to G. We document substantial bunching of energy efficiency scores just below the relevant cut‐off values, and show that it is at least partially driven by intentional misreporting by certified technicians, which points to labels' perceived importance. Estimates of donut regression discontinuity design (RDD) models reveal that house prices drop sharply when energy consumption crosses the boundary to a lower rating. Moreover, we observe larger price discontinuities in areas where the relation between energy efficiency and house values is harder to estimate. Finally, the discontinuities also show up in home sellers' list prices, suggesting that a simple buyer inattention story is insufficient to explain our findings.