Inattention in the Rental Housing Market: Evidence from a Natural Experiment

Eva Berger and Felix Schmidt

No 1716, Working Papers from Gutenberg School of Management and Economics, Johannes Gutenberg-Universität Mainz

Abstract: We investigate the question of whether agents on the rental housing market are inattentive to sizeable side costs of renting, namely commissions payable by renters to real estate agents appointed by landlords. We exploit a natural experiment created by a policy reform in Germany that shifted the payment liability for commissions from renters to landlords. Based on panel data on offers for apartments to rent, we find evidence for substantial inattention. This has allocative as well as distributional consequences as it implies an inefficiently high demand for real estate agent services at the expense of renters.

Keywords: Housing Market; Rental Prices; Real Estate Agent Commissions; Bounded Rationality (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-08-28, Revised 2019-09-06
New Economics Papers: this item is included in nep-eur and nep-ure
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https://download.uni-mainz.de/RePEc/pdf/Discussion_Paper_1716.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:jgu:wpaper:1716

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