Alas, my home is my castle: The excessive screening cost of buying a house

Arbeitspapier

This paper analyzes a model in which housing tenure choice serves as a means of screening households with different utilization rates. If the proportion of low-utilization types is small, there is a separating equilibrium at which tenure choice acts as a screening device: consistent with empirical evidence, low-utilization households buy a house, while high-utilization types rent. Otherwise, there is a pooling equilibrium. The reason why, contrary to standard screening models, a pooling equilibrium possibly exists is indivisibility of home ownership, which makes it a very costly screening device. Introducing partial ownership restores the standard results: non-existence of a pooling equilibrium and possible non-existence of an equilibrium. The same mechanisms are at work in a corporate finance context.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: BGPE Discussion Paper ; No. 134

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Housing Supply and Markets ; Asymmetric and Private Information; Mechanism Design
• Thema: housing ; tenure choice ; asymmetric information ; screening

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Arnold, Lutz G. ; Babl, Andreas
• Ereignis: Veröffentlichung
• (wer): Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)
• (wo): Nürnberg
• (wann): 2013

Weitere Informationen

• Handle: http://hdl.handle.net/10419/73431
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ