Review of Finance Vol. 25 No. 3 2021

Spillovers in Prices: The Curious Case of Haunted Houses

Utpal Bhattacharya¹; Daisy Huang²; Kasper Meisner Nielsen³

¹ Hong Kong University of Science and Technology · ² Research Institute of Economics and Management, Southwestern University of Finance and Economics · ³ Copenhagen Business School

Abstract

Exploiting the unique institutional setting of Hong Kong’s real estate market, we uncover a curious ripple effect of haunted houses on the prices of nearby houses. Prices drop on average 20% for units that become haunted, 10% for units on the same floor, 7% for units in the same block, and 1% for units in the same estate. Our study makes two contributions. First, we provide an estimate of a large negative spillover on prices caused by a quality shock. Second, we find that the demand shock rather than the fire sale supply shock explains most of the spillover.

DOI

10.1093/rof/rfaa030

Volume

25

Issue

3

Pages

903-935

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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