Door-in-the-face heuristics: Intermediaries’ diversion in rental markets

Ying Fan, Yuqi Fu and Zan Yang ()
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Ying Fan: Department of Building and Real Estate, The Hong Kong Polytechnic University
Yuqi Fu: Department of Construction Management, Tsinghua University
Zan Yang: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden

No 24/2, Working Paper Series from Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance

Abstract: This paper investigates how intermediaries with information advantages divert consumer search in rental markets and lead to inefficient outcomes. Using unique data on tenants’ initial preferences and property-visit records, we find that intermediaries deliberately prioritize the exhibition of properties distant from tenants’ preferences in their property-showing sequences and divert the visit route toward unsolicited properties. Moreover, such diversion patterns are dynamically adjusted according to the instantaneous feedback from tenants. By using diversion strategies to affect and project consumers’ preferences and willingness to pay, intermediaries can benefit from two channels, i.e., 1) distorting transaction outcomes and achieving higher commissions and 2) facilitating deals for less-favorable properties. We also provide evidence for the successive approximations of intermediaries’ diversion strategies and their implications for tenant discrimination.

Keywords: search diversion; agent; property showing; rental markets (search for similar items in EconPapers)
JEL-codes: D83 L85 R30 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2024-02-09
New Economics Papers: this item is included in nep-dcm and nep-ure
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