Loss Aversion and Seller Behavior: Evidence from the Housing Market / David Genesove, Christopher Mayer.

Format:

Book

Author/Creator:

Genesove, David.

Contributor:

National Bureau of Economic Research.

Mayer, Christopher.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8143.

NBER working paper series no. w8143

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Loss Aversion and Seller Behavior

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Summary:

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 are consistent with prospect theory and help explain the positive price-volume correlation in real estate markets.

Notes:

Print version record

March 2001.