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Comparative Cheap Talk: Evidence from the Housing Market

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  • Lingxiao Li

    (California State University–Fullerton)

  • Jia Xie

    (California State University–Fullerton)

Abstract

Using real estate transaction data, we provide the first empirical test of the comparative cheap talk model in Chakraborty and Harbaugh (2010),which predicts that a real estate agent can credibly reveal information of a house by making comparative statements that make the house more appealing in some areas but less along others. Consistent with the prediction, we find that comparative statements are associated with a 0.8% price premium, with all else being equal. The premium is larger for houses with more potential buyers, but switches sign and becomes a discount when there are too few buyers.

Suggested Citation

  • Lingxiao Li & Jia Xie, 2025. "Comparative Cheap Talk: Evidence from the Housing Market," International Real Estate Review, Global Social Science Institute, vol. 28(2), pages 117-148.
    • Handle: RePEc:ire:issued:v:28:n:02:2025:p:117-148
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    References listed on IDEAS

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    1. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    2. Shen, Lily & Ross, Stephen, 2021. "Information value of property description: A Machine learning approach," Journal of Urban Economics, Elsevier, vol. 121(C).
    3. Agarwal, Sumit & He, Jia & Sing, Tien Foo & Song, Changcheng, 2019. "Do real estate agents have information advantages in housing markets?," Journal of Financial Economics, Elsevier, vol. 134(3), pages 715-735.
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