Back to Search Start Over

LOSS AVERSION AND SELLER BEHAVIOR: EVIDENCE FROM THE HOUSING MARKET.

Authors :
Genesove, David
Mayer, Christopher
Source :
Quarterly Journal of Economics; Nov2001, Vol. 116 Issue 4, p1233-1260, 28p, 1 Diagram, 7 Charts, 1 Graph
Publication Year :
2001

Abstract

Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25–35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3–18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings suggest that sellers are averse to realizing (nominal) losses and help explain the positive price-volume correlation in real estate markets. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
00335533
Volume :
116
Issue :
4
Database :
Complementary Index
Journal :
Quarterly Journal of Economics
Publication Type :
Academic Journal
Accession number :
5562076
Full Text :
https://doi.org/10.1162/003355301753265561