Market distortions when agents are better informed

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Read the paper by Levitt and Syverson (2007). "Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions," Working Paper, University of Chicago Booth, available in the Learning Materials folder (scroll down to the bottom). Watch also the video clip on Incentives of Real Estate Agents (by Levitt and Dubner). Imagine you are relocating 3 months from now and wish to sell your home. You consider either hiring a real estate agent or putting the property for sale yourself. 1. Explain how you are going to make this decision. If you hire a real estate agent, will the agent be willing to work in your interest of finding the best customer possible? 2. Design two ways in which you can motivate the real estate agent to act in your best interest. Will your incentive scheme work? Make use of references to support your claims.

Reference no: EM131164466

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