Loss Aversion and Seller Behavior: Evidence from the Housing Market

David Genesove and Christopher Mayer

No 8143, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings are consistent with prospect theory and help explain the positive price-volume correlation in real estate markets.

JEL-codes: L10 R21 (search for similar items in EconPapers)
Date: 2001-03
Note: AP IO
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (816)

Published as Genesove, David and Christohper Mayer. "Loss Aversion And Seller Behavior: Evidence From The Housing Market," Quarterly Journal of Economics, 2001, v116(4,Nov), 1233-1260.

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Journal Article: Loss Aversion and Seller Behavior: Evidence from the Housing Market (2001)
Working Paper: Loss Aversion and Seller Behaviour: Evidence from the Housing Market (2001)
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