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Opinion

Can your Facebook friends influence your decision to buy a house?

By Theresa Kuchler and Johannes Stroebel

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To us, these findings highlight that social interactions do indeed have a large impact on individuals' housing market beliefs and housing investment behavior.

People interact with their family, friends and coworkers on a daily basis, both through online social networks and in real life. The effects of such social interactions on economic and financial decision making, however, are not well-understood.

Do such interactions influence people’s assessment of the attractiveness of investments such as houses or stocks, and is this reflected in actual investment behavior? And can social interactions influence market-level trading volume and asset prices?

Recent research we conducted on the housing market makes progress toward better understanding the importance of social interactions in shaping economic and financial decision-making. In particular, we analyzed whether people are more likely to consider housing a good investment if their friends experienced recent house price increases and whether this affected their actual real estate investments.

Learn more as published in The Conversation.

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Theresa Kuchler and Johannes Stroebel are Assistant Professors of Finance.