Mistake #37: The effect of previously encountered prices on current housing demand

Uri Simonsohn; George Loewenstein

doi:10.1111/j.1468-0297.2006.01052.x

Mistake #37: The effect of previously encountered prices on current housing demand

Uri Simonsohn, George Loewenstein

Research output: Indexed journal article › Article › peer-review

91 Citations (Scopus)

Abstract

Based on contrast effects studies from psychology, we predicted that movers arriving from more expensive cities would rent pricier apartments than those arriving from cheaper cities. We also predicted that as people stayed in their new city they would get used to the new prices and would readjust their housing expenditures countering the initial impact of previous prices. We found support for both predictions in a sample of 928 movers from the PSID. Alternative explanations based on unobserved wealth and taste, and on imperfect information are ruled out.

Original language	English
Pages (from-to)	175-199
Number of pages	25
Journal	Economic Journal
Volume	116
Issue number	508
DOIs	https://doi.org/10.1111/j.1468-0297.2006.01052.x
Publication status	Published - Jan 2006
Externally published	Yes

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10.1111/j.1468-0297.2006.01052.x

Cite this

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Mistake #37: The effect of previously encountered prices on current housing demand

Abstract

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