ABSTRACT
Round-number focal points are important to determine the outcome of negotiations, and the anchoring effect may matter disproportionately whether a listing price reached a round-number threshold. By applying regression discontinuity design method, we find that listing prices under a round-number focal point sell less than the houses list above the threshold. The effect is more pronounced in houses with greater uncertainty.
Disclosure statement
No potential conflict of interest was reported by the author.
Notes
1 We choose the samples of 2015 and 2016 because of the sample size. Around 2015, a series of favourable real estate policies, such as the central bank’s interest rate cuts and lower mortgage down payment ratio, spawned a hot market, which resulted in almost twice as many transactions in these 2 years as in other years.
2 We further develop a series of basic robustness tests, including testing the effects of alternative bandwidths and cut-off points, and testing whether the covariates are not affected by the treatment. The robustness tests confirm that round-number focal points lead to increases in final sale price of housing transactions.