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“Smarter information, smarter consumers”? Insights into the housing market

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  • Gong, Cynthia M.
  • Lizieri, Colin
  • Bao, Helen X.H.

Abstract

This study explores how information helps housing consumers make informed decisions and discusses potential market outcomes. We analyse the interaction between the disclosure of information on property conditions and the disparity between home sellers' willingness to accept (WTA) and home buyers' willingness to pay (WTP). Three hypotheses are derived and validated through field experimental investigation within the property market. We find that a WTA–WTP disparity exists. The identified policy instrument for information disclosure appears to function as expected. The WTA–WTP disparity is considerably reduced after information disclosure, and market liquidity and efficiency are improved. This study is an important complement to prior research on how information changes the behaviour of consumers in housing markets. Findings can inform central governments about the wider benefits of smart disclosure in the future, as well as the scope, format and structure of information supplied to general housing consumers to promote efficiency.

Suggested Citation

  • Gong, Cynthia M. & Lizieri, Colin & Bao, Helen X.H., 2019. "“Smarter information, smarter consumers”? Insights into the housing market," Journal of Business Research, Elsevier, vol. 97(C), pages 51-64.
    • Handle: RePEc:eee:jbrese:v:97:y:2019:i:c:p:51-64
    DOI: 10.1016/j.jbusres.2018.12.036
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    More about this item

    Keywords

    Information disclosure; WTA–WTP disparity; Nudge; Loss aversion; Housing market;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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