IDEAS home Printed from https://ideas.repec.org/p/eca/wpaper/2013-278920.html
   My bibliography  Save this paper

Incentives to (not) Disclose Energy Performance Information in the Housing Market

Author

Listed:
  • Elisabetta Cornago
  • Luisa Dressler

Abstract

Disclosure of energy performance certificates (EPCs) is often incomplete, which hampers their effectiveness in relieving information asymmetries between landlords and tenants in the housing market. Even when a certificate is available, landlords do not always disclose it. This contradicts the unraveling result, according to which all landlords should disclose quality information unless it is costly to do so. We leverage a cross-sectional dataset of residential rental advertisements from the Belgian region of Brussels to empirically evaluate incentives to disclose an EPC. We find that two fundamental assumptions for the unraveling result are not confirmed in our setting: tenants value energy performance of rental property only when dwellings are of very high quality and do not appear to rationally adjust their expectations when faced with dwellings that withhold their EPC. The paper formulates specific policy advice for reforming EPC mechanisms to increase disclosure rates.

Suggested Citation

  • Elisabetta Cornago & Luisa Dressler, 2018. "Incentives to (not) Disclose Energy Performance Information in the Housing Market," Working Papers ECARES 2018-34, ULB -- Universite Libre de Bruxelles.
  • Handle: RePEc:eca:wpaper:2013/278920
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/278920/3/2018-34-CORNAGO_DRESSLER-incentives.pdf
    File Function: Œuvre complète ou partie de l'œuvre
    Download Restriction: no

    References listed on IDEAS

    as
    1. Li, Sanxi & Peitz, Martin & Zhao, Xiaojian, 2016. "Information disclosure and consumer awareness," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 209-230.
    2. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    3. Alberto Abadie & Susan Athey & Guido Imbens & Jeffrey Wooldridge, 2017. "When Should You Adjust Standard Errors for Clustering?," Papers 1710.02926, arXiv.org, revised Oct 2017.
    4. Hyland, Marie & Lyons, Ronan C. & Lyons, Seán, 2013. "The value of domestic building energy efficiency — evidence from Ireland," Energy Economics, Elsevier, vol. 40(C), pages 943-952.
    5. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, March.
    6. Piet Eichholtz & Nils Kok & John M. Quigley, 2010. "Doing Well by Doing Good? Green Office Buildings," American Economic Review, American Economic Association, vol. 100(5), pages 2492-2509, December.
    7. Milgrom, Paul & Roberts, John, 1986. "Price and Advertising Signals of Product Quality," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 796-821, August.
    8. Michael J. Fishman & Kathleen M. Hagerty, 2003. "Mandatory Versus Voluntary Disclosure in Markets with Informed and Uninformed Customers," Journal of Law, Economics, and Organization, Oxford University Press, vol. 19(1), pages 45-63, April.
    9. Hirshleifer, David & Teoh, Siew Hong, 2003. "Limited attention, information disclosure, and financial reporting," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 337-386, December.
    10. Boyan Jovanovic, 1982. "Truthful Disclosure of Information," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 36-44, Spring.
    11. repec:eee:eneeco:v:74:y:2018:i:c:p:1-12 is not listed on IDEAS
    12. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
    13. Robert Forsythe & R. Mark Isaac & Thomas R. Palfrey, 1989. "Theories and Tests of "Blind Bidding" in Sealed-Bid Auctions," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 214-238, Summer.
    14. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2015. "Is No News (Perceived as) Bad News? An Experimental Investigation of Information Disclosure," NBER Working Papers 21099, National Bureau of Economic Research, Inc.
    15. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
    16. Brounen, Dirk & Kok, Nils, 2011. "On the economics of energy labels in the housing market," Journal of Environmental Economics and Management, Elsevier, vol. 62(2), pages 166-179, September.
    17. Rick Harbaugh & Theodore To, 2005. "False Modesty: When Disclosing Good News Looks Bad," Working Papers 2005-05, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Information Unraveling; Voluntary Information Disclosure; Asymmetric;

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:eca:wpaper:2013/278920. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels). General contact details of provider: http://edirc.repec.org/data/arulbbe.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.