This research applies data from a unique natural policy experiment to assess the effects of heuristics on housing decisions and public policy outcomes. The data derive from programs designed to privatize public housing in Israel. The programs provided tenants with a call (real) option to...

The signaling model of Spence (1973a) and the screening model of Rothchild-Stiglitz (1976) have been separately used to explain economic phenomena when there is asymmetric information. In the real world, however, situations of asymmetric information often simultaneously involve signaling and...

Consistent with existing literature, we first show that when borrowers' default probability on the mortgage loan is unobservable to the lender, the latter can screen borrowers by their combined choice of loan-to-value (LTV) ratio and interest rate. We further demonstrate that when borrowers also...

In contrast to the common tenure choice literature, we examine behavioral, as opposed to rational, factors affecting the individual's choice between homeownership and tenancy. We survey potential homebuyers in order to trace their tenure choice considerations. We find that while ordinary...

To the lender, the latter can screen borrowers by their combined choice of loan-to-value (LTV) ratio and interest rate. It further demonstrates that when borrowers signal their default risk by acquiring a credit score, then a combined separating signaling and screening equilibrium is attained....

When there is asymmetric information regarding the quality of a traded durable asset, the informed seller might signal asset quality to prospective uninformed buyers by investing in improvements and maintenance. In contrast to Spence (1973), however, this signal may be productive. We derive...

The signaling model of Spence (1973a) and the screening model of Rothchild-Stiglitz (1976) have been separately used to explain economic phenomena when there is asymmetric information. In the real world, however, situations of asymmetric information often simultaneously involve signaling and...

In this paper, we combine direct arbitrage arguments and an option-pricing approach to develop a method of pricing the option for rent control. For a lump-sum payment of key money, a tenant acquires the right to rent a real estate unit for an exogenously determined controlled rent, as opposed to...

This study developed a unified framework for theoretically analyzing a set of mortgage attributes that screens borrower types according to their unobservable default risk. In the presence of asymmetric information, a self-selection process is attained, where lower default risk type borrowers...