Sellers' and Buyers' Reference Point Dynamics in the Housing Market

R. Chenavaz, C. PARASCHIV

Housing Studies

avril 2011, vol. 26, n°3, pp.329-352

Départements : Economie et Sciences de la décision, GREGHEC (CNRS)

Housing Studies; Apr2011, Vol. 26 Issue 3, p329-352, 24pBuilding on behavioural research in economics, this paper examines reference points for sellers and for buyers in the housing market. Using experimental data, it is shown that, contrary to standard economic theory predictions, reference point dynamics can be influenced by market evolution and available information. More precisely, is it shown that the reference point depends on the seller/buyer role in the housing market, that past prices influence the reference point and that the reference point can be manipulated by information disclosure. The results are consistent with the theoretical implications of prospect theory and mental accounting.Keywords: housing information disclosure loss aversion mental accounting Prospect theory reference point