Comparative Cheap Talk: Evidence from the Housing Market

Lingxiao Li () and Jia Xie ()
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Lingxiao Li: California State University–Fullerton
Jia Xie: California State University–Fullerton

International Real Estate Review, 2025, vol. 28, issue 2, 117-148

Abstract: Using real estate transaction data, we provide the first empirical test of the comparative cheap talk model in Chakraborty and Harbaugh (2010),which predicts that a real estate agent can credibly reveal information of a house by making comparative statements that make the house more appealing in some areas but less along others. Consistent with the prediction, we find that comparative statements are associated with a 0.8% price premium, with all else being equal. The premium is larger for houses with more potential buyers, but switches sign and becomes a discount when there are too few buyers.

Keywords: Cheap talk; Comparative statement; Information asymmetry; House price (search for similar items in EconPapers)
Date: 2025
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