Information and Search on the Housing Market: An Agent-based Model
We simulate a closed rental housing market with search and matching frictions, in which both landlord and tenant agents may be imperfectly informed of the characteristics of the market. The model hypotheses are set so as to match a rent posting search model in the spirit of search models of the labor market. In the simulations, landlords decide what rent to post based on the expected effect of the rent on the time-on-the-market (TOM) required to find a tenant. Each tenant observes their idiosyncratic preference for a random offer and decides whether to accept the offer or continue searching, based on their imperfect knowledge of the distribution of offered rents. The steady state to which the simulation evolves shows price dispersion, nonzero search times and vacancies. We further assess the effects of altering the level of information for landlords. Landlords are better off when they have less information. In that case they underestimate the TOM and so the steady-state of the market moves to higher rents. However, when landlords with different levels of information are present on the market, the better informed are consistently better off. The model setup also allows the analysis of market dynamics. It is observed that dynamic shocks to the discount rate can provoke overshoots in rent adjustments due in part to landlords use of outdated information in their rent posting decision.
|Date of creation:||Sep 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.ersa.org
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Arnott, Richard, 1989.
"Housing Vacancies, Thin Markets, and Idiosyncratic Tastes,"
The Journal of Real Estate Finance and Economics,
Springer, vol. 2(1), pages 5-30, February.
- Richard Arnott, 1988. "Housing Vacancies, Thin Markets, and Idiosyncratic Tastes," Working Papers 722, Queen's University, Department of Economics.
- John Mc Breen & Florence Goffette-Nagot & Pablo Jensen, 2009.
"An Agent-Based Simulation of Rental Housing Markets,"
0908, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
- John Mc Breen & Florence Goffette-Nagot & Pablo Jensen, 2009. "An Agent-Based Simulation of Rental Housing Markets," Post-Print halshs-00374157, HAL.
- Gabriel Desgranges & Etienne Wasmer, 2000.
"Appariements sur le Marché du Logement,"
Sciences Po publications
info:hdl:2441/8988, Sciences Po.
- Stuart A. Gabriel & Frank E. Nothaft, 1988.
"Rental Housing Markets and the Natural Vacancy Rate,"
Real Estate Economics,
American Real Estate and Urban Economics Association, vol. 16(4), pages 419-429.
- Stuart A. Gabriel & Frank E. Nothaft, 1987. "Rental housing markets and the natural vacancy rate," Working Paper Series / Economic Activity Section 74, Board of Governors of the Federal Reserve System (U.S.).
- Hwang, Min & Quigley, John M., 2006.
"Economic Fundamentals in Local Housing Markets: Evidence from U.S. Metropolitan Regions,"
Berkeley Program on Housing and Urban Policy, Working Paper Series
qt79d325cm, Berkeley Program on Housing and Urban Policy.
- Min Hwang & John M. Quigley, 2006. "Economic Fundamentals In Local Housing Markets: Evidence From U.S. Metropolitan Regions," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 425-453.
- Marcus Allen & Ronald Rutherford & Thomas Thomson, 2009. "Residential Asking Rents and Time on the Market," The Journal of Real Estate Finance and Economics, Springer, vol. 38(4), pages 351-365, May.
- Ralph Bradburd & Stephen Sheppard & Joseph Bergeron & Eric Engler, 2004.
"The Impact of Rent Controls in Non-Walrasian Markets: An Agent-Based Modeling Approach,"
Department of Economics Working Papers
2004-05, Department of Economics, Williams College, revised May 2005.
- Ralph Bradburd & Stephen Sheppard & Joseph Bergeron & Eric Engler, 2006. "The Impact Of Rent Controls In Non-Walrasian Markets: An Agent-Based Modeling Approach," Journal of Regional Science, Wiley Blackwell, vol. 46(3), pages 455-491.
- Bradburd, Ralph & Sheppard, Stephen & Bergeron, Joseph & Engler, Eric & Gee, Evan, 2005. "The distributional impact of housing discrimination in a non-Walrasian setting," Journal of Housing Economics, Elsevier, vol. 14(2), pages 61-91, June.
- Jim Clayton & Greg MacKinnon & Liang Peng, 2008. "Time Variation of Liquidity in the Private Real Estate Market: An Empirical Investigation," Journal of Real Estate Research, American Real Estate Society, vol. 30(2), pages 125-160.
- Jeffrey Fisher & Dean Gatzlaff & David Geltner & Donald Haurin, 2003. "Controlling for the Impact of Variable Liquidity in Commercial Real Estate Price Indices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 31(2), pages 269-303, 06.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa11p1395. 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: (Gunther Maier)
If references are entirely missing, you can add them using this form.