Directed Search in the Housing Market

Susan Vroman, Pieter Gautier and James Albrecht

No 372, 2007 Meeting Papers from Society for Economic Dynamics

Abstract: We consider a housing market with large numbers of buyers and sellers. Sellers differ in their reservation prices; buyers are ex ante identical. In the first stage of the game, each seller posts an asking price. Next, each buyer, after observing all asking prices, chooses a house to visit. Upon visiting a house, a buyer observes an idiosyncratic value, x, the maximum amount he would be willing to pay for the house. The buyer then decides whether to make a bid on the house and, if so, at what level. If only one buyer makes an offer on a house, the buyer and seller negotiate over the price with the seller’s asking price as a maximum. If more than one buyer makes an offer on a house, the buyers can engage in Bertrand competition. We analyze the equilibrium of this directed search game.

Date: 2007
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Related works:
Journal Article: Directed Search in the Housing Market (2016)
Working Paper: Directed Search in the Housing Market (2013)
Working Paper: Directed Search in the Housing Market (2010)
Working Paper: Directed Search in the Housing Market (2010)
Working Paper: Directed Search in the Housing Market (2009)
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