The impact of competition on expert's information disclosure: the case of real estate brokers

Abstract

Competition can theoretically counter or reinforce tendency of experts to pass biased information to customers. Using data from an online company connecting real estate brokers with clients who want to sell their properties, we show that more competition or lower opportunity to collude induce brokers to raise their ini- tial price estimation by more than 3%. This is observed upstream, when experts appraise the property for sale. Competition partially prevents brokers from biais- ing downward evaluations, and is benecial to the client since it translates into a positive eect on listing and sale prices with no signicant eect on the time to sale.

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Reference

Frédéric Cherbonnier, and Christophe Lévêque, “The impact of competition on expert's information disclosure: the case of real estate brokers”, TSE Working Paper, n. 21-1255, October 2021.