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We analyze the terms of the brokerage contract between a house seller and his agent, using the established literature on the principal-agent problem. Considering the influence of moral hazard and adverse selection, we predict a number of features of the contract. Many of these features are not present in observed contracts. To account for this discrepancy, we discuss certain aspects of the real estate market which are not included in the standard principal-agent model but may explain the difference. Standard principal-agent theory neglects important contract design considerations, namely robustness and costs of complexity. In general, the commission contract performs poorly by failing to allocate risk efficiently or to provide agent incentives. It favors established agents and precludes contractual diversity. Finally, we contrast the brokerage contract for real estate with the dealership contract for used cars, but find no compelling answer as to why there are few used house dealers.

Using data collected from specially-designed questionnaires, the duration of search by a house buyer is estimated. Duration is measured in two ways: in terms of time and in terms of the number of houses seen. To explain this data, several features must be added to a simple model when search models are applied to a housing market. Many of the statistically significant variables, such as prior information and the quality of information provided by a newspaper or a real estate agent, deal with the provision of information. The type of agency that employs the agent and the characteristics of the buyer have little effect. Copyright American Real Estate and Urban Economics Association.

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En utilisant les notes obtenues durant la première année à l'université en Ontario nous examinons la possibilité d'une hausse des notes dans différentes disciplines. Dans un sondage de sept universités durant les périodes allant de 1973-74 à 1993-94, nous trouvons une hausse significative des notes dans divers programmes dans les arts et les sciences. Le taux de hausse n'est pas uniforme. Par exemple, dans les mathématiques, il n'y a eu pas ou peu de changement dans les notes moyennes dans la plupart des universités tandis qu'en anglais et en biologie, la hausse des notes était significative. Using information on first-year university grades from across Ontario, we examine whether or not there has been grade inflation by discipline. In a survey of seven universities for the periods 1973-74 and 1993-94, we find significant grade inflation in various Arts and Science programs. The rate of inflation is not uniform. Some subjects, such as Mathematics experienced little or no change in average grades at most universities, while English and Biology experienced significant grade inflation.

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Papers studying the liquidity of a market tend to focus on decisions involving the trade-off between the selling price and the time-till-sale for a given set of market conditions. This paper characterizes the effect of a change in market conditions on a single seller, where seller benefits from either a "value-increasing" or a "liquidityincreasing" change in market conditions. Shamelessly stealing from demand theory, I show how the effect of either type of change on price and on the probability-of-sale can be decomposed into a "value effect" and a "substitution effect." Two adding-up conditions restrict the set of possible predictions.The discussion focusses on the market for real estate assets where stochastic rationing is most evident, especially in the discussion of empirical implications. Even so, the same ideas can be applied to markets where other selling mechanisms dominate and, for this reason, I offer a general theory of how individual behavior adjusts to changing conditions. JEL: C70, D40, R31