Conflicts between principals and agents: evidence from residential brokerage

Rutherford, Ronald C.; Springer, Thomas M.; Yavaş, Abdullah

doi:10.1016/j.jfineco.2004.06.006

Cited by 266 publications

(229 citation statements)

References 14 publications

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“…Our results contrast with those obtained for the real estate industry by Levitt and Syverson (2008) and Rutherford, Springer, and Yavas (2005). In those studies, real estate agents perform better when selling their own houses than when selling houses owned by clients.…”

Section: Discussioncontrasting

confidence: 99%

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Holding onto Your Horses: Conflicts of Interest in Asset Management

Boyle

Guthrie

Gorton³

2010

The Journal of Law and Economics

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Racehorse trainers operate unregulated asset management businesses in which the assets owned by outside clients compete with those owned by trainers for the latter's time, care and attention. However, market mechanisms appear to deal effectively with the resulting agency problem in situations where it matters most. In a sample of 8000 racehorses and their associated stables, we find that client-owned horses do indeed perform worse than their trainer-owned counterparts in small stables that have relatively few outside clients, but that the reverse is true in large stables where client-owners provide much of the trainer's income -agents with more to lose apparently behave better. Moreover, they appear to have good reasons for doing so: client-owned horses that under-perform are more likely to be transferred to another stable, thereby causing a loss of income for the original trainer.

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Section: Discussioncontrasting

confidence: 99%

“…For example, Levitt and Syverson (2008) and Rutherford, Springer, and Yavas (2005) compare house sales in which the real estate agent acts on behalf of a client with sales where the agent is the seller, and find that agent-owned houses sell for approximately 4% more after controlling for differences in house characteristics.…”

Section: Introductionmentioning

confidence: 99%

Holding onto Your Horses: Conflicts of Interest in Asset Management

Boyle

Guthrie

Gorton³

2010

The Journal of Law and Economics

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“…Our result of a 2.7 percent difference in transaction performance is substantial -and obviously larger than the opportunity costs of the time spent when someone decides to sell the house through a low-service flat-fee broker. The result for flat-fee brokers is similar in size to that of brokers who sell a house that they own themselves; see Rutherford et al (2005) and Levitt and Syverson (2008b). The higher price obtained by a broker-owner can be explained by the superior information available to the broker and the higher effort level he or she expands.…”

Section: Introductionmentioning

confidence: 77%

Real-Estate Agent Commission Structure and Sales Performance

2017

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Do higher real-estate agent fees imply better performance? This study uses a nation-wide data set of residential real-estate transactions in the Netherlands from 1985 to 2011 to provide evidence against this. Brokers with a flat-fee structure who charge an up-front fee (which is substantially lower than the average fee of traditional brokers) and leave the viewings to the seller sell faster and at -on average -2.7 percent higher prices. We correct for fixed houseand time effects. We provide additional evidence that the price difference is not due to a seller-selection effect.

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“…Levitt and Syverson interpret this as evidence for the importance of prior information asymmetries. In a similar study, Rutherford et al (2005) find that agent-owned homes sell on average for 4 5 percent more than other homes.…”

Section: Introductionmentioning

confidence: 84%

Optimal delegated search with adverse selection and moral hazard

Ulbricht

2016

Theoretical Economics

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This paper studies a model of delegated search. The distribution of search revenues is unknown to the principal and has to be elicited from the agent so as to design the optimal search policy. At the same time, the search process is unobservable, requiring search to be self-enforcing. The two information asymmetries are mutually enforcing: if one is relaxed, delegated search is efficient. With both asymmetries prevailing simultaneously, search is almost surely inefficient (it is stopped too early). Second-best remuneration is shown to optimally utilize a menu of simple bonus contracts. In contrast to standard adverse selection problems, indirect nonlinear tariffs are strictly dominated.

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Conflicts between principals and agents: evidence from residential brokerage

Cited by 266 publications

References 14 publications

Holding onto Your Horses: Conflicts of Interest in Asset Management

Holding onto Your Horses: Conflicts of Interest in Asset Management

Real-Estate Agent Commission Structure and Sales Performance

Optimal delegated search with adverse selection and moral hazard

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