- Author: James Albrecht, Pieter A. Gautier, and Susan Vroman
- Speaker: Susan Vroman (Georgetown University)
- Speaker: Susan Vroman (Georgetown University)
- Date: July 2nd, 2013
- Venue: Room C, 5th Floor (GRIPS)
Paper:
http://www9.georgetown.edu/faculty/vromans/AGVHousingMay2012.pdf
Summary of Paper:
This paper presents a directed search model of the housing market. The pricing mechanism analyzed here reflects the way houses are bought and sold in the United States. Our model is consistent with the observation that houses are sometimes sold above, below, and even at the asking price. Two versions of our model are considered. In the first, all sellers have the same reservation value. In the second, there are two types of sellers, where type is private information. For both versions, we characterize the equilibrium of the game played by buyers and sellers, while also proving efficiency. Our model offers a new way to look at the housing market from a search-theoretic perspective. In addition, we contribute to the directed search literature by considering a model in which the asking price (i) entails only limited commitment and (ii) has the potential to signal seller type.
This paper presents a directed search model of the housing market. The pricing mechanism analyzed here reflects the way houses are bought and sold in the United States. Our model is consistent with the observation that houses are sometimes sold above, below, and even at the asking price. Two versions of our model are considered. In the first, all sellers have the same reservation value. In the second, there are two types of sellers, where type is private information. For both versions, we characterize the equilibrium of the game played by buyers and sellers, while also proving efficiency. Our model offers a new way to look at the housing market from a search-theoretic perspective. In addition, we contribute to the directed search literature by considering a model in which the asking price (i) entails only limited commitment and (ii) has the potential to signal seller type.
