This study aims to provide a proposal for the disclosure of information necessary for expanding the existing housing market. The study uses a theoretical model of information disclosure for housing quality and equilibrium prices in the existing housing market in which there is information asymmetry. The theoretical model is compared to the data from an experimental economics method and this study analyzes the offering price, contract price, and contract rate.
In theory, a perfect Bayesian equilibrium becomes a separating equilibrium when there is information disclosure. However, if any part of the information remains undisclosed, a pooling equilibrium forms. A similar outcome was observed in this experiment. On the other hand, the contract price in the experiment was lower than the theoretical price, which means that the seller does not necessarily maximize profits. The amount of information disclosure positively correlates with the number of contracts, and influences the contract price and the seller's offering price. This study finds that normative information disclosure that provides fair profits to both the seller and buyer is perfect information not only in theory, but also in an experiment.
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