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Asymmetric information and list-price reductions in the housing market

  • de Wit, Erik R.
  • van der Klaauw, Bas

In housing markets with asymmetric information list prices may signal unobserved properties of the house or the seller. Asymmetric information is the starting point for many models for the housing market. In this paper, we estimate the causal effect of list-price reductions on the time houses remain for sale on the market to test for the presence of asymmetric information. We use very rich and extensive administrative data from the Netherlands. Our empirical results show that list-price reductions significantly increase the selling rate of a house, but also the rate of withdrawal from the market increases.

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File URL: http://www.sciencedirect.com/science/article/pii/S0166046213000240
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Article provided by Elsevier in its journal Regional Science and Urban Economics.

Volume (Year): 43 (2013)
Issue (Month): 3 ()
Pages: 507-520

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Handle: RePEc:eee:regeco:v:43:y:2013:i:3:p:507-520
DOI: 10.1016/j.regsciurbeco.2013.03.001
Contact details of provider: Web page: http://www.elsevier.com/locate/regec

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