Data and Code for: Betting on the House: Subjective Expectations and Market Choices

Principal Investigator(s): View help for Principal Investigator(s) Nicolas Bottan, Cornell University; Ricardo Perez-Truglia, UC Berkeley

Version: View help for Version V1

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Figure3_a.pdf	application/pdf	774.7 KB	03/27/2024 11:01:AM
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Project Description

Summary: Home price expectations play a central role in macroeconomics and finance. However, there is little direct evidence on how these expectations affect market choices. We provide the first causal evidence based on a large-scale, high-stakes, and naturally occurring field experiment in the United States. We mailed letters with information on trends in home prices to 57,910 homeowners who had listed their homes on the market. Collectively, these homes were worth $34 billion. We randomized the information contained in the mailing to create non-deceptive, exogenous variation in the subjects home price expectations. We then used rich administrative data to measure the effects of these information shocks on the subjects' market choices. We found that, consistent with economic theory, higher home price expectations caused a reduction in the probability of selling the home. These effects were highly statistically significant, economically large in magnitude, and robust to a number of sharp checks. Our results indicated that market choices were highly elastic to expectations: a 1 percentage point increase in home price expectations caused a 2.63 percentage point reduction in the probability of selling the property within 12 weeks.

Scope of Project

Subject Terms: expectations; experiment; housing market; information

JEL Classification:
      C81 Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
      C93 Field Experiments
      D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
      D84 Expectations; Speculations
      R31 Housing Supply and Markets

Geographic Coverage: United States of America

Data Type(s): administrative records data; aggregate data; census/enumeration data; event/transaction data; experimental data; observational data; survey data

Methodology

Unit(s) of Observation: Individual

Related Publications

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Published Versions

V1 [2024-12-20]

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