Joel Hochman’s research while affiliated with Yeshiva University and other places

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Publications (1)


Fairness as a Constraint in the Real Estate Market
  • Article

March 1999

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39 Reads

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4 Citations

Journal of Business Ethics

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Jeremy Pava

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Joel Hochman

Community standards, ethical norms, and perceptions of fairness often serve as constraints on pure profit maximizing behavior. Consider the following examples: Most hardware stores refrain from raising prices on snow shovels after a major snow storm, even where short term profits might be increased. Most employers do not lower wages for existing employees, even as unemployment in the area increases. Automobile dealerships rarely raise sticker prices to cope with the long waiting periods for a popular model. Each of these anomalies is consistent with the proposition that firms increase profits subject to fairness constraints. This paper examines perceptions of fairness in the residential real estate industry and explores how community standards affect economic decision-making. The residential real estate industry is unique. One party to the transaction (the landlord) frames decisions as pure business decisions. The other party to the transaction (the tenant) frames decisions more broadly. While a tenant's choice of apartments is in part viewed as a business decision, tenants consider a broad spectrum of non-business issues, as well. This disjunction between landlord and tenant perceptions can lead to unique ethical quandaries and can explain otherwise anomalous economic behavior in the industry. The hypothetical case examined in this paper is based on a frequently encountered situation in the industry. The paper concludes with practical suggestions for managers.

Citations (1)


... In addition, while fairness has been analyzed in other contexts such as consumer prices for products (Ferguson et al. 2014), real estate (Pava et al. 1999), and legal decisions (Tyler 1989), few empirical studies examine fairness in capital markets. The question of equal access to information has endured as one of the most central points of contention (Shefrin and Statman 1993), but few researchers empirically examine the extent to which privileged shareholders actually benefit from preferential information in terms of trading behavior and share price. ...

Reference:

Managers’ Moral Obligation of Fairness to (All) Shareholders: Does Information Asymmetry Benefit Privileged Investors at Other Shareholders’ Expense?
Fairness as a Constraint in the Real Estate Market
  • Citing Article
  • March 1999

Journal of Business Ethics