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Equilibrium Effects of Superstition in the Housing Market

Chen, Jiawei and Shum, Matthew (2019) Equilibrium Effects of Superstition in the Housing Market. Japanese Economic Review, 70 (3). pp. 341-345. ISSN 1352-4739. https://resolver.caltech.edu/CaltechAUTHORS:20190819-142432102

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Abstract

We investigate the interaction of product quality differentiation and consumer preference heterogeneity in durable goods markets, focusing on the effects of secondary market liquidity and consumer heterogeneity on equilibrium prices. We build an infinite‐horizon dynamic model of the apartments housing market that captures the above features. Some apartments are considered lucky, and some consumers are superstitious. Lucky apartments are valued more highly than non‐lucky ones only by superstitious consumers. Results show that the difference between the lucky apartment price and the non‐lucky apartment price becomes smaller when the secondary market becomes less liquid and when consumers’ preference heterogeneity becomes more persistent as opposed to time‐varying.


Item Type:Article
Related URLs:
URLURL TypeDescription
https://doi.org/10.1111/jere.12236DOIArticle
ORCID:
AuthorORCID
Shum, Matthew0000-0002-6262-915X
Additional Information:© 2019 Japanese Economic Association. Issue Online: 08 September 2019; Version of Record online: 18 August 2019; Manuscript accepted: 26 June 2019.
Issue or Number:3
Record Number:CaltechAUTHORS:20190819-142432102
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20190819-142432102
Official Citation:Chen, J. and Shum, M. (2019), Equilibrium Effects of Superstition in the Housing Market. Jpn Econ Rev, 70: 341-345. doi:10.1111/jere.12236
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:98007
Collection:CaltechAUTHORS
Deposited By: Tony Diaz
Deposited On:19 Aug 2019 21:32
Last Modified:03 Oct 2019 21:37

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