American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Betting on the House: Subjective Expectations and Market Choices
American Economic Journal: Applied Economics
vol. 17,
no. 1, January 2025
(pp. 459–500)
Abstract
Home price expectations play a central role in macroeconomics and finance. However, there is little direct evidence on their effect on market choices. We provide causal evidence using a large-scale, high-stakes field experiment in the United States. We sent letters about home price trends to 57,910 homeowners who listed their homes. These letters contained randomized information creating nondeceptive, exogenous variation in home price expectations. Consistent with economic theory, higher expectations reduced selling probability. Behavior was highly elastic: a 1 percentage point increase in expectations caused a 2.63 percentage point reduction in the probability of selling the property within 12 weeks.Citation
Bottan, Nicolas, and Ricardo Perez-Truglia. 2025. "Betting on the House: Subjective Expectations and Market Choices." American Economic Journal: Applied Economics, 17 (1): 459–500. DOI: 10.1257/app.20230641Additional Materials
JEL Classification
- C93 Field Experiments
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D84 Expectations; Speculations
- R31 Housing Supply and Markets
There are no comments for this article.
Login to Comment