We model listing decisions in the housing market, and structurally estimate household preference and constraint parameters using comprehensive Danish data. Sellers optimize expected utility from property sales, subject to down-payment constraints, and internalize the effect of their choices on final sale prices and time-on-the-market. The data exhibit variation in the listing price-gains relationship with "demand concavity;" bunching in the sales distribution; and a rising listing propensity with gains. A new fact is that gains and down-payment constraints have interactive effects on listing prices. We find reference-dependence around the nominal purchase price and modest loss-aversion, but our canonical model cannot fully explain the new facts.
|Udgiver||Centre for Economic Policy Research|
|Status||Udgivet - nov. 2019|
|Navn||Centre for Economic Policy Research. Discussion Papers|
- Loss aversion
- Reference dependence
- Down-payment constraints
Andersen, S., Badarinza, C., Liu, L., Marx, J., & Ramadorai, T. (2019). Reference Dependence in the Housing Market. Centre for Economic Policy Research. Centre for Economic Policy Research. Discussion Papers, Nr. DP14147 https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14147#