The impact of competition on experts' information disclosure: the case of real estate brokers

Abstract

We analyze how competition can counter the tendency of experts to pass biased information to their customers, by using data from an online company that connects real estate brokers with clients who want to sell their housings. Different counterfactuals allow us to show that more competition or lower opportunity to collude induce brokers to raise their initial price estimation by about 5 percent. A similar but lesser impact is observed on listing price and selling price, but no significant effect is observed on the time to sell, which suggests that the manipulation of information observed in the absence of competition is detrimental to the client. Increasing competition among agents also changes the way they respond to, and sometimes align with, price preferences expressed by their customers.