Round-Number Effects in Real Estate Prices: Evidence from Germany

Arbeitspapier

Round numbers affect behavior in various domains, e.g., as prominent thresholds or focal points in bargaining. In line with earlier findings, residential real estate transactions in Germany cluster at round-number prices, but there are also interesting (presumably cultural) differences. We extend our analysis to the commercial real estate market, where stakes are even higher and market participants arguably more experienced. For the same type of object, professionals cluster significantly less on round-number prices compared to non-professionals. We employ machine learning and show that transactions of family homes and condominiums at round-number prices are 2–7% above their hedonic values.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 10746

Classification and Topics

• Classification: Wirtschaft ; Microeconomic Behavior: Underlying Principles ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡ ; Bargaining Theory; Matching Theory ; Housing Supply and Markets
• Subject: round-number effects ; focal points ; residential real estate ; commercial real estate ; housing prices ; machine learning

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Englmaier, Florian ; Roider, Andreas ; Schlereth, Lars ; Sebastian, Steffen
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282434
• Last update: 10.03.2025, 11:42 AM CET