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Information Asymmetry, Regulations and Equilibrium Outcomes: Theory and Evidence from the Housing Rental Market

Brent W. Ambrose and Moussa Diop
We explore the role of information asymmetry and regulations on equilibrium outcomes in rental markets to show that while landlords price the cost of regulations into rent, they also invest in tenant screening to alleviate information asymmetry, thus restricting access to rental housing. We are the first to document this additional tenant screening in response to regulations.