An Agent-Based Simulation of Rental Housing Markets

John Mc Breen (), Florence Goffette-Nagot () and Pablo Jensen ()
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John Mc Breen: University of Lyon, Lyon, F-69003, France; CNRS, LET, UMR 5593, Lyon, F-69363 France, ENS-LYON, Laboratoire de Physique, UMR 5672, Lyon, F-69007, France, Institut rhônalpin des systèmes complexes, IXXI, Lyon, F-69007, France
Pablo Jensen: University of Lyon, Lyon, F-69003, France; CNRS, LET, UMR 5593, Lyon, F-69363 France, ENS-LYON, Laboratoire de Physique, UMR 5672, Lyon, F-69007, France, Institut rhônalpin des systèmes complexes, IXXI, Lyon, F-69007, France

No 908, Working Papers from Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon

Abstract: We simulate a closed rental housing market with search and matching frictions, in which both landlord and tenant agents are imperfectly informed. Homogeneous landlords set rents to maximise revenue, using information on the market to estimate the relationship between posted rent and time-on-the-market (TOM). Tenants, heterogeneous in income, engage in undirected search accepting residences based on their idiosyncratic tastes for housing and a disagreement point derived from information on the distribution of offers. The steady state to which the simulation evolves shows price dispersion, nonzero search times and vacancies. The main results concern the effects of increasing information on either side of the market. When tenants see a greater percentage of the distribution of offers, tenants learn to refuse high rents and so the population rises and tenants' utilities rise as does overall welfare. Conversely, when landlords have less information, their utility can rise as over estimations in best posting rent move the market to higher rents.

Keywords: Real estate; Rental markets; Search; Information; Simulation; Multi-agent systems (search for similar items in EconPapers)
JEL-codes: C63 J63 R13 R20 R31 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: An Agent-Based Simulation of Rental Housing Markets (2009)
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