Incentives to (not) Disclose Energy Performance Information in the Housing Market

Elisabetta Cornago and Luisa Dressler

No 2018-34, Working Papers ECARES from ULB -- Universite Libre de Bruxelles

Abstract: Disclosure of energy performance certificates (EPCs) is often incomplete, which hampers their effectiveness in relieving information asymmetries between landlords and tenants in the housing market. Even when a certificate is available, landlords do not always disclose it. This contradicts the unraveling result, according to which all landlords should disclose quality information unless it is costly to do so. We leverage a cross-sectional dataset of residential rental advertisements from the Belgian region of Brussels to empirically evaluate incentives to disclose an EPC. We find that two fundamental assumptions for the unraveling result are not confirmed in our setting: tenants value energy performance of rental property only when dwellings are of very high quality and do not appear to rationally adjust their expectations when faced with dwellings that withhold their EPC. The paper formulates specific policy advice for reforming EPC mechanisms to increase disclosure rates.

Keywords: Information Unraveling; Voluntary Information Disclosure; Asymmetric (search for similar items in EconPapers)
Pages: 49 p.
Date: 2018-11
New Economics Papers: this item is included in nep-ene, nep-reg and nep-ure
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Citations: View citations in EconPapers (3)

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Journal Article: Incentives to (not) disclose energy performance information in the housing market (2020)
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