| The Journal of Real Estate Finance and Economics | |
| Volume 23, Issue 1, Article 4 (Abstract) | |
| Title: | A Study of the Brokerage Cost Allocation in a Rental Housing Market with Asymmetric Information |
| Author: | Danny Ben-Shahar |
| 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 bokerage commission. Finally, we empirically examine and confirm a set of the model's assumptions and derivations within the rental housing market framework. |
| Keywords: | brokerage, rental markets, asymmetric information, tenure duration |