Price setting and the reluctance to realize losses in apartment markets

Mikko Einiö, Markku Kaustia and Vesa Puttonen

Journal of Economic Psychology, 2008, vol. 29, issue 1, 19-34

Abstract: Using data on all real estate transactions in the greater Helsinki area during 1987-2003 (about 80,000 apartment transactions with capital gains available), we find substantial support for loss realization aversion. Further, a disproportionate number of sales occurred exactly at the original purchase price. Reluctance to realize losses is weaker with pricier apartments, seasoned sellers, and apartments that are likely bought for investment purposes. Mortgage down payment requirements are unlikely to fully explain the results. On the whole the results are consistent with loss aversion and mental accounting.

Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167-4870(07)00014-1
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:29:y:2008:i:1:p:19-34

Access Statistics for this article

Journal of Economic Psychology is currently edited by G. Antonides and D. Read

More articles in Journal of Economic Psychology from Elsevier
Bibliographic data for series maintained by Catherine Liu ().