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Heterogeneous effects of information disclosure: Evidence from housing markets

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  • Kim, Hayoung

Abstract

I empirically show that information asymmetry among market participants leads to heterogeneous effects of information disclosure, by exploiting a magazine's reports on good places to live. The positive news has little effect on local homebuyers, indicating that the news may not offer new information about local fundamentals. Instead, the number of transactions made by those buyers gradually increases by 13.2% during the two-year pre-treatment period. However, informationally disadvantaged out-of-town buyers react strongly to the news. The number of such buyers increases by 21.9% in the quarter following the magazine reports, and local housing prices increase significantly by as much as 9.0% in two years. Non-local buyers are therefore largely responsible for the house price appreciation in the focal markets. The results do not only suggest that third-party information interventions have the potential to mitigate information asymmetries, but also highlight the importance of being promptly informed in housing markets.

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  • Kim, Hayoung, 2022. "Heterogeneous effects of information disclosure: Evidence from housing markets," Journal of Economic Behavior & Organization, Elsevier, vol. 195(C), pages 359-380.
    • Handle: RePEc:eee:jeborg:v:195:y:2022:i:c:p:359-380
    DOI: 10.1016/j.jebo.2022.01.017
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    More about this item

    Keywords

    Information asymmetry; Information disclosure; Housing market;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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