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It’s not a question of getting the absolute minimum salary, but of getting less than the absolute maximum. If I recall correctly, the authors of Freakanomics d
by sethg 16y ago
It’s not a question of getting the absolute minimum salary, but of getting less than the absolute maximum.
If I recall correctly, the authors of Freakanomics discovered that when real-estate agents sell their own houses, they sell for a higher price than comparable houses where a non-agent used an agent as a middleman. This confirms the hypothesis that agents are willing to compromise on price to close the deal sooner.
- Peroni 16y agoThis confirms the hypothesis that agents are willing to compromise on price to close the deal sooner. Correction: This confirms the hypothesis that ESTATE agents are willing to compromise on price to close the deal sooner.
- achompas 16y agoThe Freakonomics result only applies to that sample of real estate agents. Even then, the sample is only taken from a population of real estate agents. In other words, results don't extrapolate to all agents.
- URSpider94 16y agoNonsense. For your argument to be true, you'd have to assume that there was something special about the sample population chosen by the authors. That flies against the laws of statistics. Further, there is a clear explanation of the behavior that aligns with the economic incentives of the parties. In buying and selling homes multiple times, I have always casually mentioned the study to my agents, and they have vehemently denied that it is true. However, in every transaction save one, the agents have eventually acted in ways that would close the deal quickly for a loss to me, yet get them their (slightly reduced) commission sooner.
- achompas 16y agoOf course there's something special about the sample Levitt chose: it's all real estate agents. If the statistical results are sound then we can infer some characteristics about the population. But in this case, the sample came from a population of real estate agents. There is a fixed effect found across the whole sample: they're in the housing business, not the headhunting business. No recruiters in that population, so we can't infer anything about recruiters in general. Sorry to argue semantics, but this is a basic sampling concept that people forget about.
- dpritchett 16y agoMore specifically, an agent working on commission gets proportionally less reward for a price increase than does someone negotiating on their own behalf. - Real estate agent negotiates 8 hours for an additional $10,000 on the sales price: 5% commission gets him $500 for an hourly rate of $63. - Real estate agent negotiates 8 hours for an additional $10,000 on the sales price of his own home: he keeps all $10,000 for an hourly rate of $1250. - Recruiter negotiates for 8 hours for an additional $5000 salary: he gets a 20% commission for $1000 or $125/hr. - Job hunter negotiates for 8 hours for an additional $5000 on his own salary: he gets $5000 for $625/hr. plus compounding effects for every future salary negotiation that is based off of his current salary.