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IMPERFECT INFORMATION AND DIFFERENCES IN HOME OWNERSHIP INVESTMENT
Author(s) -
Hirono Keiko Nosse
Publication year - 2004
Publication title -
pacific economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.34
H-Index - 33
eISSN - 1468-0106
pISSN - 1361-374X
DOI - 10.1111/j.1468-0106.2004.00253.x
Subject(s) - investment (military) , economics , perfect information , microeconomics , metropolitan area , imperfect , consumption (sociology) , monetary economics , medicine , social science , linguistics , philosophy , pathology , sociology , politics , political science , law
. We study the extent to which differences in home ownership investment are caused by differences in information known about the property. We study the advantages accruing to buyers who have complete information and who can pay less than the equilibrium price if sellers undervalue their properties. The reduction in home ownership investment can increase consumption or investment in other assets. We develop an empirical model to capture the gain to such buyers. We estimate this to have been 12.6%−27.6% of the equilibrium price of houses at maximum in the Tokyo metropolitan area during the 1980s.