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Title: Asymmetric Information and List Price Reductions in the Housing Market

Author(s): Erik de Wit and Bas van der Klaauw

Publication Date: May 2010

Keyword(s): duration analysis, selectivity, Time-on-the-market and transaction prices

Programme Area(s): Financial Economics

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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Bibliographic Reference

de Wit, E and van der Klaauw, B. 2010. 'Asymmetric Information and List Price Reductions in the Housing Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=7799