An Experimental Comparison of Commission Patterns in the Resale Housing Market in China

Abstract

Abstract Using economical experiments, this study comparatively examines the effects of fixed-percentage commission pattern and flat-fee pattern on the brokers' behaviour and the brokerage results. To study the trading process of resale housing and the characters of broker services in the actual housing market, two groups of experiments were designed and implemented in lab. The findings conclude that compared with the flat-fee pattern, the broker's efforts are less, the service duration is shorter and the effectiveness of brokerage is worse when the fixed-percentage commission pattern is used. Considering the conclusions and the prevalent fixed-percentage commission pattern in the real market, this study suggests the application of flat-fee pattern should be encouraged and supported. The study enriches the research methods in the field of real estate and expands the application scope of experimental economic tools.