Asymmetric Information and List-Price Reductions in the Housing Market

Erik de Wit
Bas van der Klaauw

Regional Science and Urban Economics 43, 507-520 (2013)

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

(Click here to download the PDF file containing the paper)

Last updated: April 2, 2013.