A Study of the Brokerage Cost Allocation in a Rental Housing Market with Asymmetric Information

Danny Ben-Shahar*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

We analyze the brokerage service cost allocation in the rental housing market. We explain the alleged inconsistent phenomenon of landlords only occasionally requiring tenants to incur mediation cost. We show that when asymmetric information is introduced, under which tenants' tenure horizon is unobservable to landlords, a separating equilibrium may be attained, in which the length of the tenant's tenure horizon is directly related to his share in the brokerage commission. Finally, we empirically examine and confirm a set of the model's assumptions and derivations within the rental housing-market framework.

Original languageEnglish
Pages (from-to)77-94
Number of pages18
JournalJournal of Real Estate Finance and Economics
Volume23
Issue number1
DOIs
StatePublished - 2001
Externally publishedYes

Keywords

  • Brokerage
  • Rental housing
  • Symmetric information

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