Asymmetric Information and List-Price Reductions in the Housing Market
Erik de Wit
Bas van der KlaauwRegional Science and Urban Economics 43, 507-520 (2013)
Abstract
In housing markets with asymmetric information list prices
may signal unobserved properties of the house or the seller.
Asymmetric information is the starting point of many models for the
housing market. In this paper, we estimate the causal effect of
list-price reductions 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 probability of selling a
house, but also the rate of withdrawal from the market increases
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Last updated: April 2, 2013.