The Price of Inattention: Evidence from the Swedish Housing Market

A-Tier
Journal: Journal of the European Economic Association
Year: 2020
Volume: 18
Issue: 6
Pages: 3261-3304

Score contribution per author:

2.018 = (α=2.02 / 2 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Do behavioral biases affect prices in a high-stakes market? We study the role of left-digit bias in the purchase of an apartment. Left-digit bias is the failure to fully process digits after the first, perceiving prices just below a round number (such as $3.99) as cheaper than their round counterpart ($4). Apartments with asking prices just below round millions are sold at a 3%–5% higher final price after an auction. This effect appears not to be driven by differences in observables or in real estate agents’ behavior. Auctions for apartments listed just below round numbers are more competitive and attract more bidders and bids.

Technical Details

RePEc Handle
repec:oup:jeurec:v:18:y:2020:i:6:p:3261-3304
Journal Field
General
Author Count
2
Added to Database
2026-02-09