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Door-in-the-face heuristics: Intermediaries’ diversion in rental markets

Author

Listed:
  • Fan, Ying

    (Department of Building and Real Estate, The Hong Kong Polytechnic University)

  • Fu, Yuqi

    (Department of Construction Management, Tsinghua University)

  • Yang, Zan

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

This paper investigates how intermediaries with information advantages divert consumer search in rental markets and lead to inefficient outcomes. Using unique data on tenants’ initial preferences and property-visit records, we find that intermediaries deliberately prioritize the exhibition of properties distant from tenants’ preferences in their property-showing sequences and divert the visit route toward unsolicited properties. Moreover, such diversion patterns are dynamically adjusted according to the instantaneous feedback from tenants. By using diversion strategies to affect and project consumers’ preferences and willingness to pay, intermediaries can benefit from two channels, i.e., 1) distorting transaction outcomes and achieving higher commissions and 2) facilitating deals for less-favorable properties. We also provide evidence for the successive approximations of intermediaries’ diversion strategies and their implications for tenant discrimination.

Suggested Citation

  • Fan, Ying & Fu, Yuqi & Yang, Zan, 2024. "Door-in-the-face heuristics: Intermediaries’ diversion in rental markets," Working Paper Series 24/2, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2024_002
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    search diversion; agent; property showing; rental markets;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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