DP7799 Asymmetric Information and List Price Reductions in the Housing Market
|Author(s):||Erik de Wit, Bas van der Klaauw|
|Publication Date:||May 2010|
|Keyword(s):||duration analysis, selectivity, Time-on-the-market, transaction prices|
|JEL(s):||C41, D82, R21, R31|
|Programme Areas:||Financial Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=7799|
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.