Loss aversion and seller behavior: Evidence from the housing market

David Genesove, Christopher Mayer

Research output: Contribution to journalArticlepeer-review

821 Scopus citations


Data from downtown Boston in the 1990s show that loss aversion determines seller behavior in the housing market. Condominium owners subject to nominal losses 1) set higher asking prices of 25-35 percent of the difference between the property's expected selling price and their original purchase price; 2) attain higher selling prices of 3-18 percent of that difference; and 3) exhibit a much lower sale hazard than other sellers. The list price results are twice as large for owner-occupants as investors, but hold for both. These findings suggest that sellers are averse to realizing (nominal) losses and help explain the positive price-volume correlation in real estate markets.

Original languageAmerican English
Pages (from-to)1233-1260
Number of pages28
JournalQuarterly Journal of Economics
Issue number4
StatePublished - Nov 2001

Bibliographical note

Funding Information:
* We are especially indebted to Debbie Taylor for providing LINK’s weekly listing files and many helpful suggestions. We also wish to thank Paul Anglin, Rachel Croson, Gary Engelhardt, Donald Haurin, Laurie Hodrick, Glenn Hubbard, Gur Huberman, Robert Shiller, Richard Thaler, Edward Glaeser, the editor, and seminar participants at various institutions for many helpful and insightful comments. The excellent research assistance of Margaret Enis, Meeta Anand, Rupa Patel, Karen Therien, and Per Juvkam-Wold is also appreciated. Research funding from the Maurice C. Falk Institute for Economic Research in Israel is acknowledged.


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