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Author Question: Steven Levitt and Chad Syverson compared home sales in which real estate agents are hired by others ... (Read 56 times)

ereecah

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on: Jun 29, 2018
Steven Levitt and Chad Syverson compared home sales in which real estate agents are hired by others to sell a home to instances in which an agent sells his or her own home. They found that homes owned by real estate agents sold for 3.
 
  7 percent more than other houses and stayed on the market 9.5 days longer, everything else equal. How could moral hazard explain these results?

Question 2

The Coase Theorem asserts that government intervention is a prerequisite for addressing externality problems.
 
  Indicate whether the statement is true or false
InMicro ¦ Hubbard, O'Brien ¦ 1st Edition
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kswal303

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Reply #1 on: Jun 29, 2018
Answer to Question 1

Real estate agents often know much more about the housing market than the typical homeowner. Because real estate agents receive only a small share of the additional profit when a house sells for a higher price, there is an incentive for them to convince their clients to sell their houses too cheaply and too quickly.
See Steven D. Levitt and Chad Syverson, Market Distortions When Agents are Better Informed: The Value of Information in Real estate Transactions, Review of Economics and Statistics, October 2008

Answer to Question 2

FALSE


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