The Effect of Risk Information on Housing Prices in Taiwan

Tzu Chang Forrest Cheng, Tai Chi Wang, Jian Da Zhu

Research output: Contribution to journalArticlepeer-review


This research uses a difference-in-differences framework to investigate the effect of new risk information on housing prices in Taiwan. The results show that this information changed individuals' subjective risk perceptions, so that housing prices in the highest-risk areas dropped, but only temporarily in the first three months after the disclosure. This information effect happened for those apartments lacking certain earthquake-resistant characteristics. In addition, we investigate the dynamics of the effect around the boundary. We demonstrate that individuals were able to form continuous risk beliefs based on discrete information, and the housing prices dropped more sharply for apartments located closer to the center of the highest-risk area. Furthermore, individuals had updated their risk beliefs differently for apartments with different levels of earthquake resistance. For apartments with the least earthquake resistance, the immediate price drops were larger, and the housing prices returned to normal more slowly, relative to the safer apartments. Most notably, the effect did not disappear at all for those apartments with the least earthquake resistance that were also located in the center of the highest-risk area.

Original languageEnglish
Pages (from-to)41-73
Number of pages33
JournalAcademia Economic Papers
Issue number1
StatePublished - Mar 2022


  • Housing market
  • Information disclosure
  • Risk perception
  • Soil liquefaction risk


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