Gutenberg School of Management and Economics & Research Unit “Interdisciplinary Public Policy” Discussion Paper Series Inattention in the Rental Housing Market: Evidence from a Natural Experiment Eva M. Berger and Felix Schmidt September 6, 2019 Discussion paper number 1716 Johannes Gutenberg University Mainz Gutenberg School of Management and Economics Jakob-Welder-Weg 9 55128 Mainz Germany https://wiwi.uni-mainz.de/ Contact Details: Eva M. Berger Chair of Public Economics Johannes Gutenberg University Mainz Jakob-Welder-Weg 4 55128 Mainz Germany
[email protected] Felix Schmidt Chair of Public Economics Johannes Gutenberg University Mainz Jakob-Welder-Weg 4 55128 Mainz Germany
[email protected] All discussion papers can be downloaded from http://wiwi.uni-mainz.de/DP Inattention in the Rental Housing Market: Evidence from a Natural Experiment Eva M. Berger∗ and Felix Schmidty September 6, 2019 Abstract We investigate the question of whether agents on the rental housing market are inat- tentive to sizeable side costs of renting, namely commissions payable by renters to real estate agents appointed by landlords. We exploit a natural experiment created by a policy reform in Germany that shifted the payment liability for commissions from renters to land- lords. Based on panel data on offers for apartments to rent, we find evidence for substantial inattention. This has allocative as well as distributional consequences as it implies an inef- ficiently high demand for real estate agent services at the expense of renters. Acknowledgments: First of all, the authors would like to thank Immobilienscout24 for providing the main data used in this paper.