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Loss aversion in housing appraisal: Evidence from Italian homeowners

Andrea Lamorgese () and Dario Pellegrino

Journal of Housing Economics, 2022, vol. 56, issue C

Abstract: Loss aversion is considered a driver of downward price rigidity in real estate markets: during downturns – when market price of their house is below the price at which they purchased it – loss averse homeowners do not evaluate their houses at the former one but anchor the resale price to the latter price. As a consequence, prices are sluggish to adjust downward, time to sale becomes longer, ask and transaction prices differ.

Keywords: Loss aversion; Prospect theory; Housing market; Households surveys (search for similar items in EconPapers)
JEL-codes: L10 R21 R31 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:56:y:2022:i:c:s105113772200002x

DOI: 10.1016/j.jhe.2022.101826

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