Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282137 
Year of Publication: 
2023
Series/Report no.: 
Discussion Paper No. 446
Publisher: 
Ludwig-Maximilians-Universität München und Humboldt-Universität zu Berlin, Collaborative Research Center Transregio 190 - Rationality and Competition, München und Berlin
Abstract: 
Round numbers affect behavior in various domains, e.g., as prominent thresholds or focal points in bargaining. In line with earlier findings, residential real estate transactions in Germany cluster at round-number prices, but there are also interesting (presumably cultural) differences. We extend our analysis to the commercial real estate market, where stakes are even higher and market participants arguably more experienced. For the same type of object, professionals cluster significantly less on round-number prices compared to non-professionals. We employ machine learning and show that transactions of family homes and condominiums at round-number prices are 2–7% above their hedonic values.
Subjects: 
round-number effects
focal points
residential real estate
commercial real estate
housing prices
machine learning
JEL: 
D01
D91
C78
R31
Document Type: 
Working Paper

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