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

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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.
By Theresa Kuchler and Johannes Stroebel
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.

Theresa Kuchler and Johannes Stroebel are Assistant Professors of Finance.