Agenda

08 Feb 2017 12:30

Marianne Blehaut - The cost of misinformation: Evidence from an industrial disaster

Meeting Room 1, Campus San Giobbe, Venezia

Relatrice: Marianne Blehaut - CREST, Paris

Abstract: How accurate is the assumption of perfect information in real markets? In particular, for complex goods such as housing, quality is possibly unobserved. This would lead to an inefficient allocation of resources and a welfare loss. Using an industrial disaster as quasi-experimental setting, I measure the housing market reaction to a symmetric information shock and show by contrast that the initial situation was characterized by imperfect information. More precisely, I show that when information relative to bad environmental quality is revealed, housing prices significantly and robustly decrease in the short term. Far from being a mere transitory shock, this effect is reinforced in the medium term. All in all, I find a 1 to 2% price decrease in the short term, and an additional decrease twice as large in the medium term. In addition, the relative number of vacant housing units increases in these areas, and there is some evidence supporting residential sorting since mean household earnings decrease. The literature relative to housing reaction to environmental quality still heavily relies on hedonic methods and thus on the assumption of perfect information. This paper shows that this assumption should be treated with caution since in many settings it is likely not to be valid.

Lingua

L'evento si terrà in italiano

Organizzatore

Dipartimento di Economia

Link

https://sites.google.com/site/marianneblehaut/

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