Marginal Implicit Price Research Articles

Roots of urban equality: Are low-income neighborhoods paying more for street trees?

This study investigates the potential influence of street trees on the single-family housing market in Seattle between 2010 and 2020, specifically examining how the relationship between the number of street trees and housing prices varies across neighborhoods with different income levels. It further discusses the policy implications for promoting environmental justice in urban tree-planting endeavors. We used Seattle’s street tree planting data from the 1950s to 2020 and housing transaction records between 2010 and 2020, covering 61,055 housing transactions. Four buffer lengths were applied to associate street trees with individual housing parcels and transactions. The relationship between street trees and the single-family housing market was evaluated through linear regressions and spatial lag models using Spatial Two-stage Least Squares (S2SLS). An interaction term between the number of street trees and neighborhood income was also used to examine the potential varying associations across neighborhoods with different income levels. Subsequently, we calculated the marginal implicit price (MIP) across the city. The results indicate that street trees are valued more in the housing market of lower-income areas. The findings underscore the importance of community-based intervention in the tree-planting process, especially in lower-income areas, to promote environmental justice and enhance neighborhood greenery.

An hedonic evaluation of the impacts of vertical coordination on business performance amongst apple producers in Morocco

We present an econometric analysis of the marketing of apples in Morocco that investigates the relationship between vertical coordination arrangements and the prices of apples for farmers. In this study, the hedonic method is used to evaluate the vertical coordination of apple fruit chains by analyzing the marginal implicit price of different product characteristics. We examine the variables influencing apple prices for farmers, comprising intrinsic factors related to the farm's characteristics and quality attributes such as fruit variety and fruit diameter. Additionally, we consider extrinsic variables associated with marketing factors, including vertical coordination systems, payment terms, seasonality of sale, cold storage, and geographical origin. Based on a nationally representative survey of 190 apple growers in the southeast of Morocco, an empirical analysis is conducted. Results highlight the pivotal role of apple growers' experience in elevating farm-level prices, indicating a deeper understanding of market dynamics. Significant price variations are tied to quality attributes, notably a 19.2% premium for larger apples (75–85 mm diameter), indicating market preference. The economic analysis underscores the influence of apple varieties, with Golden commanding a 16.4% higher price, indicating heightened consumer demand. Additionally, the study found that marketing factors, vertical coordination models, payment terms, seasonality of sale, cold storage, and geographical origin also have a positive impact on apple prices. Furthermore, vertical coordination models positively impact apple and prices provide producers with guidance for effective supply chain coordination. These insights, extending beyond theory, serve as a roadmap for policymakers to support the agricultural sector. Equipped with knowledge of business performance, farmers can implement targeted measures to enhance the marketing value of their agricultural products, fostering resilience and profitability in the Moroccan apple sector.

Economic Valuation of Bukit Kiara Federal Park using the Hedonic Pricing Approach

Urban Green Space (UGS) is a part of urban modern cities living. The significance of the UGS has been outlined in Sustainable Development Goals 11 and 15. Nevertheless, the economic benefits of UGS are often overlooked due to a lack of understanding of their monetary value. This study estimates the economic value of Bukit Kiara Federal Park using the hedonic pricing model. The estimation was conducted by regressing the prices of 599 properties surrounding the park. The change in house pricing could estimate the marginal implicit price which represented the economic value of the park due to the change in its distance to the park (environmental attribute). The results show that reducing the distance by 100 meters increases the house price between RM1,800 and RM54,000 indicating the economic value of Bukit Kiara Federal Park. The study proved that the existence of environmental attributes, in this case, the proximity of a park, influences the house price in the vicinity. Recognizing these economic values will support the justification for developing and maintaining parks which may provide long-term benefits to the community and the environment.

Valuing soil erosion control investments in Nigerian agricultural lands: A hedonic pricing model

The effects of climate change are often writ large in the nexus of water and land. In Nigeria, predominantly rainfed agriculture is confronting the consequences of climate extremes in the form of excessive rainfall, especially in the southern region. Relatedly, the hazard of soil erosion represents one of the most pressing forms of land degradation, thereby threatening agricultural production and farmers’ livelihoods. The objective of this analysis is to estimate the economic value of investing in a climate change adaptation strategy, specifically soil erosion control measures on agricultural lands in Nigeria. The analysis employs a hedonic pricing model, using household-level self-reported land values from the Nigeria Living Standards Measurement Survey, 2015–2016 and 2018–2019. Results indicate that undertaking soil erosion control facilities is heavily capitalized into Nigerian agricultural land values. The estimated marginal implicit price (MIP) for undertaking soil erosion control is approximately 26% of mean land values. This value represents around half the annual nominal median income of a Nigerian agrarian household. The estimated MIP of soil erosion control adoption is positive in areas that experience moderate rainfall. Results are maintained across a variety of robustness checks. Our findings suggest that soil erosion control adoption can be an important source of wealth creation among smallholder farmers who are mainly engaged in subsistence farming. Results support wider adoption of erosion control by landowners in accordance with highly variable weather patterns, and more broadly suggest the need to recognize the long-term gains from climate-smart agriculture (CSA) practices and target investment aid towards sustainable agriculture.

Urban Crime and Its Net Implicit Price to North Carolina Households

This study investigates the impact of urban crime rates—property and violent—on wages and rents and estimates the net implicit monetary value of crime rates for living in metropolitan areas, using the American Community Survey 2019 data for cities in North Carolina. A seemingly unrelated regression estimation finds that the crime rates are capitalized into both wages and rents, and suggests crime rates affect wages positively and rents negatively. This investigation estimates a negative value of $51.80 per month—the average net marginal implicit price—for living in cities with high city crime rates. This negative value suggests that households are being compensated for living in cities with high crime rates.

Hedonic Price Functions and Market Structure: An Analysis of Supply-Motivated Submarkets for Salmon in California

Hedonic price functions are frequently used to identify the marginal implicit prices for characteristics of differentiated products, including seafood products. These marginal implicit prices are determined by both consumer preferences and producer costs. When preferences or costs for a single characteristic differ systematically across omitted submarkets, the results are an average of the heterogeneous effects. An empirical test for the joint significance of interaction terms is sufficient to identify the presence of submarkets. We motivate the selection of submarkets on the basis of production differences across salmon species, then use county-level aggregate retailer scanner data for the US state of California from 2013 to 2016 to estimate hedonic price functions. The results indicate that species and production method submarkets exist. Letting differences in production motivate the dimensions for submarkets results in a more accurate picture of the market.

Losses of Residential Utility from Budget Constraints on Preferences for Homes

Budget-constrained residential preferences differ from unconstrained residential preferences if residents mentally devalue unaffordable attributes’ levels of available homes in comparison with affordable ones. Budget-constrained and unconstrained utilities of 70 recent-mover respondents in Saskatoon SK in 1987 and 74 inner-city respondents in Windsor ON in 2020 are quantified for 12 generic attributes of homes in conjoint choice experiments. Budget constraints on their utilities for homes’ attributes’ levels are operationalized by superimposing marginal implicit prices from a hedonic housing price model in each city. Residential utilities are then statistically compared both through time and for subsamples within full samples, and losses of utility are predicted. Respondents will experience an approximate one-quarter and one-tenth loss of possible utility for a home in Saskatoon and Windsor, respectively, if they cannot afford their unconstrained most preferred attributes’ levels. Losses of utility are predicted even though budget-constrained utilities of subsamples of respondents are higher as hypothesized for affordable levels of four attributes, and lower for unaffordable levels of those attributes. In conclusion, theoretical and practical implications of these predictions of losses of residential utility are discussed for residents, housing providers and policymakers.

Geospatial Heterogeneity in Monetary Value of Proximity to Waterfront Ecosystem Services in the Gulf of Mexico

Open spaces, including waterfront areas, are critical to coastal communities and provide many benefits, including recreation opportunities, economic development, ecological benefits, and other ecosystem services. However, it is not clear how values of waterfront ecosystem services vary across geographical areas which prevents development and adoption of site-specific natural resource conservation plans and suitable long-term land management strategies. This study estimated the monetary value of distance to different waterfront types in coastal counties of Mississippi and Alabama (U.S.) using a geographically weighted regression (GWR) approach as an extension to a traditional hedonic pricing method (HPM). In addition, the study utilized publicly available data from the U.S. Census Bureau instead of certified rolls of county property assessors and Multiple Listing Service (MLS) data which can be costly and difficult to obtain. Residents valued most waterfront types which was reflected in greater assessed prices for houses in proximity to these waterfronts. However, the value of ecosystem services associated with waterfronts differed geospatially. The marginal implicit prices ranged from −$6343 to $6773 per km depending on a waterfront type. These estimates will be useful to city developers, land-use planners, and other stakeholders to make more informed and balanced decisions related to natural resource preservation associated with coastal areas, land-use planning, and zoning. In addition, information from this study can be used in developing healthy living environments where local economy can benefit from increased property tax revenues associated with waterfronts and their ecosystem services.

Do landscape amenities impact private housing rental prices? A hierarchical hedonic modeling approach based on semantic and sentimental analysis of online housing advertisements across five Chinese megacities

Real estate premium associated with landscape amenities is a well-studied topic with a primary focus on housing prices. Presumably, the willingness-to-pay for landscape amenities should be very different between homeowners and tenants. Thus far, how landscape amenities affect residential rental prices is not well understood. This paper takes advantage of the big data of online housing advertisements to unravel how landscape amenities are capitalized into rental prices across five Chinese megacities (Beijing, Shanghai, Shenzhen, Hangzhou and Wuhan). Natural language processing, the latent Dirichlet allocation in particular, is first employed to semantically analyze the geo-textual advertisements. It reveals that ‘landscape amenities’ is a typical topic and ‘park’ is a typical component for housing advertisements in the five megacities. The lexicon-based sentimental analysis further shows that the strength of the sentiments associated with the ‘landscape amenities’ varies with cities. A series of hierarchical hedonic models based on the extracted semantic and sentimental aspects are then established for each megacity after segmenting the rental market into submarkets. The capitalization effect of landscape amenities is significant in Beijing, Hangzhou and Wuhan, while it is not significant in Shanghai and Shenzhen. Finally, variance decomposition analysis and marginal implicit price calculation unveil to what extent landscape amenities contribute to residential rental prices. Based on these findings, we discuss several major implications for urban planning. Our study unsettles the popular presumption that landscape amenities are key determinants of real estate values. It renews our understanding of the economic values of landscape amenities theoretically and methodologically.

Heterogeneous impacts of large carnivores on hunting lease prices

Notwithstanding their crucial role in ecosystem functionality, large carnivores generally entail economic costs to hunters due to competition for the same prey. This cost could potentially vary depending on carnivore density and the game hunting values at stake. We estimate a hedonic price model applying the unconditional quantile regression method in order to investigate the impact of large carnivores along the distribution of hunting lease prices in Sweden. We compare these impacts with those obtained from conditional quantile regressions, as well as from ordinary least squares estimations. Based on the unconditional quantile estimates, our results indicate that wolf, lynx and bear can exert a negatively significant effect in the middle range of the outcome distribution, while no significant impact is found in the lower quantiles. For the statistically significant quantiles, the average marginal implicit price of an additional wolf territory in the study area is around 3.35 million Swedish kronor (SEK) per year, namely 358 thousand Euros (EUR). This corresponds to an annual reduction in the mean hunting lease price per hectare by 21% in the municipality where the territory is established. Similarly, an additional lynx family group entails an average marginal implicit price of SEK 3.55 million (EUR 379 thousand) per year, and an additional brown bear individual entails an average marginal implicit price of nearly SEK 110 thousand (EUR 11.6 thousand) per year. The corresponding impact on the mean hunting lease price per hectare is a reduction by 22.4% and 0.6% for an additional lynx family group and an additional brown bear individual, respectively, in the municipality where the establishment occurs. Results can be useful for policies targeting the spatial distribution of large carnivores.

Energy performance certificates and house prices: a quantile regression approach

PurposeA number of studies have investigated the relationship between energy performance certificates (EPCs) and house prices. A majority of studies have tended to model energy performance pricing effects within a traditional hedonic conditional mean estimate model. There has been limited analysis that has accounted for the relationship between EPCs and the effects across the pricing distribution. Moreover, there has been limited research examining the “standard cost improvements EPC score”, or “potential score”. Therefore, this paper aims to quantify and measure the dynamic effects of EPCs on house prices across the price spectrum and account for standardised cost-effective retrofit improvements.Design/methodology/approachExisting EPC studies produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price effect. The approach within this study applies a quantile regression approach to empirically estimate how quantiles of house prices respond differently to unitary changes in the proximal effects of EPCs and structural property characteristics across the conditional distribution of house prices. Using a data set of 1,476 achieved transaction prices, the quantile regression models apply both assessed EPC score and bands and further examine the potential EPC rating for improved energy performance based on an average energy cost improvement.FindingsThe findings show that EPCs are valued differently across the quantiles and that conditional quantiles are asymmetrical. Only property prices in the upper quantiles of the price distribution show significant capitalisation effects with energy performance, and only properties with higher EPC scores display positive significant effects at the higher end of the price distribution. There are also brown discount effects evident for lower-rated properties within F- and G-rated EPC properties at the higher end of the pricing distribution. Moreover, the potential energy efficiency rating (score) also shows increased effects with sales prices and appears to minimise any brown discount effects. The findings imply that energy performance is a complex feature that is not easily “averaged” for valuation effect purposes.Originality/valueWhile numerous studies have investigated the pricing effects of EPCs, they have tended to provide a single estimate to determine the relationship with price. This paper extends the traditional analytical insights beyond the conditional mean estimate by examining the quantiles of the relationship between EPCs and house prices to enhance the understanding of this esoteric and complex issue. In addition, this research applies the assessed energy efficiency potential to establish whether effective cost improvements enhance the relationship with sales price and capitalisation effects.

Prices paid for farmland in Ontario: Does buyer type matter?

AbstractIn the wake of the substantial increases in farmland values that have occurred in Ontario since 2008, concerns have been expressed regarding the potential influence of nonfarmer buyers, such as investment companies and foreign buyers, on prices paid for farmland. To examine whether these concerns may be warranted, this paper estimates the impact of nonfarmer buyers on sale prices for farmland in Ontario, using a hedonic approach and farmland sales data from 2002 to 2016. Analysis is also conducted to determine whether marginal implicit prices of specific farm attributes differ between farmer buyers and nonfarmer buyers. The results indicate that nonfarmer buyers have paid higher prices for farmland, but only in near‐urban areas. In addition, differences in marginal implicit prices for farmland attributes are found, where farmer buyers value more highly attributes related to the agricultural productivity of the property while nonfarmer buyers value more highly attributes related to nonagricultural use. These results imply that the higher prices paid by nonfarmers may be attributable to the bid‐rent theory, as nonfarmers may be bidding more than farmers for farmland in near‐urban areas due to higher expected returns from future urban use of the land.

Assessing Impact of Freshwater Lake Ecosystem on Residential Property Prices using Hedonic Property Pricing approach: Evidence from Vellayanilake of Kerala

ABSTRACT The ecosystem services provided by wetlands can be direct or indirect. The direct services can be mostly valued through market prices, but the indirect service like aesthetic beauty and its impact on property prices surrounding the natural resource cannot be directly measured. To single out the economic effect of particular amenity which influenced the land property prices, the advanced valuation technique Hedonic property pricing was most popularly used. In this study, it was attempted to assess using the hedonic property pricing technique, the impact of the presence of the freshwater body, the Vellayani Lake on land property prices surrounding it. The results revealed that the marginal implicit price of getting one cent of land with lake view evaluated at mean property price of Rs. 2,44250 was Rs.79171. The total aesthetic value of land with the scenic beauty of the lake was Rs. 275.92 crores.

Valuation of Large Carnivores and Regulated Carnivore Hunting

Large carnivores are keystone species but represent economic costs to hunters. In Sweden, carnivore territories generally overlap with hunting areas, and as a result, conflicts occur because of the competition for prey. The wolf, lynx, and brown bear are protected species by law but are hunted when authorities allocate license hunting quotas. The aim of these quotas is to limit carnivore numbers. We estimate a hedonic model using ordinary least squares to address the effect of large carnivore occurrence on hunting lease prices by accounting for the presence of license hunting quotas for predators. This result is compared with the least absolute deviation estimations, which reduce the influence of outliers in the survey data. To isolate the effect of carnivores on hunting lease prices, we use snow depth and forest productivity as proxy variables for game harvest in the absence of carnivores. Our results show that lynx and wolf presence reduce hunting lease prices, but lynx presence shows higher significance and robustness. Based on median regressions, the marginal implicit price of an additional wolf territory is about 15% larger than that of an additional lynx territory. In contrast, we found no conclusive evidence that bear abundance directly affects hunting lease prices, but regulated bear hunting is found to have a positive and significant impact on hunting leases, suggesting indirect positive net benefits of increased brown bear abundance.

Households’ acceptability of local (Ofada) rice based on quality attributes in South-West, Nigeria

PurposeThe purpose of this paper is to examine households’ acceptability of local (Ofada) rice by identifying the quality attributes influencing marginal implicit prices (MIPs) paid by rice consumers’ households in South-West, Nigeria.Design/methodology/approachThe data used for this study were collected from a survey of 600 rice-consuming households in the study area. A multistage sampling technique was employed to select the respondents. Well-structured questionnaires were used to collect information on general households’ socioeconomic characteristics, their desirability and preference for local (Ofada) rice, and market prices of Ofada rice. Kendall’s concordance test was performed to confirm agreement among respondents in their rankings of the rice quality attributes. Hedonic price function was used to examine the relationship between implicit prices paid by consumers based on quality attributes of local (Ofada) rice, as observed in the market.FindingsThe result of Kendall’s coefficient of concordance revealed that there is 73.74 per cent agreement in ranking quality attributes of local (Ofada) rice consumers’ households in the study area. Colour, perceived nutrient level, taste, grain shape and rate of breakage were the most ranked quality attributes with mean attribute ranking scores of 1.56, 1.69, 3.12, 5.53 and 5.86, respectively. The result of the hedonic pricing model revealed that households are willing to pay MIPs of ₦71.03 ($0.20), ₦45.23 ($0.13), ₦32.98 ($0.09), ₦21.06 ($0.06) and ₦14.41($0.04) per kg for colour, grain cohesion, grain shape, perceived nutrient level and perceived chemical storage, respectively, while discounting MIPs of ₦60.55 ($0.17), ₦19.36 ($0.05), ₦17.14 ($0.05) and ₦6.00 ($0.02) for texture, rate of breakage, perceived freshness and low swelling capacity per kg of local (Ofada) rice, respectively.Research limitations/implicationsContinuous importation of rice into the country has many negative implications such as worsening of the poverty status of local rice farmers, unemployment of teeming youths engaged in rice value chain, and exposure to soaring and unpredictable price bringing unsustainable development. Lastly, over-dependency on rice importation, if not checked, can also permit dumping of low quality and sometimes expired rice into the country. All aforementioned reasons will make it difficult for local rice to compete favourably with imported varieties.Practical implicationsKendall’s coefficient of concordance and Hedonic model were used as a diagnostic tools. These diagnostic tools show the need for government and relevant stakeholders to focus on improving the quality of local (Ofada) rice, especially the undesirable attributes. This could be achieved by adopting modern processing technology, that will enhance production and consumers’ acceptability, which could make local (Ofada) rice have good market share against imported brands.Social implicationsThe economic value of a good is revealed by the consumer’s willingness to pay for the good, consequently increasing production through consumers’ acceptability, and improve living standard of farmers and processors through increased earnings.Originality/valueThe choice of a particular local rice, especially local (Ofada) rice, is made to estimate the effect of different attributes on the price paid by rice consumers’ households and to help in the development of effective technologies and policy that enhance better rice quality using both Kendall’s coefficient of concordance and Hedonic model to achieve the objective. For the first time this research has given clarity on the monetary value attached to local (Ofada) rice consumption by rice consumers’ households through quality attributes.

A hedonic pricing method to estimate the value of waterfronts in the Gulf of Mexico

Open spaces, including waterfront areas, are publicly-or-privately owned landscapes that provide numerous benefits and services such as opportunities for recreational activities, ecological benefits, and economic development. However, with rapidly growing populations, development pressure on these areas has been increasing, often leading to conflicts between proposed land uses. Information on the monetary value of environmental amenities provided by these spaces would help decision-makers account for their importance to quality of life. This study estimated the monetary value associated with waterfronts using the hedonic pricing method (HPM) and real estate sales data for the coastal cities of Mobile and Daphne in Alabama, USA. The price of houses sold during 2001 to 2015 was used as the dependent variable and house structural and neighborhood attributes and presence of environmental amenities served as independent variables. Results showed that coastal residents considered proximity to waterfronts as one of the most important factors when buying a house and paid higher prices for houses located near most waterfront types. In Mobile, marginal implicit prices of proximity to waterfronts ranged from $2490 to $3530 per km, whereas in Daphne, the price ranged from $9250 to $15,460 per km. Findings can help guide future decisions related to development of coastal areas, land-use planning, urban forestry, and open space preservation by balancing opportunities for urban and commercial development as well as providing public access to open space environmental amenities with close proximity to residential areas.

Capitalization of Flood Insurance and Risk Perceptions in Housing Prices: An Empirical Agent‐Based Model Approach

Federally regulated or insured lenders in the United States are mandated to require flood insurance on properties that are located in areas at high risk of flooding. Despite the existence of this mandatory flood insurance requirement, take‐up rates for flood insurance have been low, and the federal government's exposure to uninsured property losses from flooding remains substantial. Meanwhile, the value of capital at risk varies significantly with flood events and changing risk perceptions, which necessitates mechanisms that stabilize these dynamics. In this article we discuss how a scenario of complete insurance uptake, under various risk attitudes, affects the value of properties in the 100‐year and 500‐year flood zones. Our results indicate that an increase in flood insurance uptake may provide such a mechanism by lowering the value of capital at risk in the flood zone consistently, independent of homeowners' risk attitudes. We apply an empirical adaptive agent‐based model to examine the capitalization of insurance costs, risk premiums, and their interaction in housing prices. Our approach combines widely‐used empirical hedonic analysis with the computational economic framework. We highlight the usefulness of our method in capturing the marginal implicit price of homeowners' preferences that may change over time and separately assess the effect of various factors and policies on property values, illustrating the agent‐based modeling as a valuable complement to traditional hedonic analysis.

House prices and neighbourhood amenities: beyond the norm?

PurposeUnderstanding the key locational and neighbourhood determinants and their accessibility is a topic of great interest to policymakers, planners and property valuers. In Northern Ireland, the high level of market segregation means that it is problematic to understand the nature of the relationship between house prices and the accessibility to services and prominent neighbourhood landmarks and amenities. Therefore, this paper aims to quantify and measure the (dis)amenity effects on house pricing levels within particular geographic housing sub-markets.Design/methodology/approachMost hedonic models are estimated using regression techniques which produce one coefficient for the entirety of the pricing distribution, culminating in a single marginal implicit price. This paper uses a quantile regression (QR) approach that provides a “more complete” depiction of the marginal impacts for different quantiles of the price distribution using sales data obtained from 3,780 house sales transactions within the Belfast Housing market over 2014.FindingsThe findings emerging from this research demonstrate that housing and market characteristics are valued differently across the quantile values and that conditional quantiles are asymmetrical. Pertinently, the findings demonstrate that ordinary least squares (OLS) coefficient estimates have a tendency to over or under specify the marginal mean conditional pricing effects because of their inability to adequately capture and comprehend the complex spatial relationships which exist across the pricing distribution.Originality valueNumerous studies have used OLS regression to measure the impact of key housing market externalities on house prices, providing a single estimate. This paper uses a QR approach to examine the impact of local amenities on house prices across the house price distribution.

Estimating the Marginal Implicit Price of the Spatially Diverse Environmental Amenities from Urban Open Space in Onondaga County, New York: A Geographically Weighted Regression Approach

This research applies Geographically Weighted Regression (GWR) to investigate how different types of urban open space and their spatial configurations are valued by residential property owners. To reflect residential property owners’ perception of neighborhood and spatially heterogeneous configuration of urban open spaces, environmental amenity variables are measured at 100m and 1km radius buffer surrounding each residential property. GWR and Ordinary Least Squares (OLS) models are applied to analyze 4469 arms-length residential property transactions from Onondaga County, NY (USA) between Jan. 2000 and Dec. 2000 and are evaluated in terms of model fitting and spatial effects assessment. Results of this research show that GWR models outperform OLS models in model fitting and detecting spatial effects in model residuals, as well as is able to find spatial non-stationary relationships in larger number of environmental amenity variables. This research innovates in several ways. First, it innovates by considering spatial configuration of open spaces reflecting residential property owners’ perspective. Second, this research illustrated spatially varying effect of urban open space variables using the marginal implicit price of each variable.

Bridging the Gap Between Revealed and Stated Preferences in Flood-prone Housing Markets

This papers attempts to shed light on the gap between revealed and stated preferences methods in flood-prone housing markets. We quantitatively explore the market-level consequences of various behavioural models' assumptions regarding risky choices at the individual level. In addition, we quantify the effect of the market-level bias in risk valuation that individual preferences for neighbourhood quality imply. We apply an economic agent-based housing market model to quantify and disentangle the impacts of behavioural biases in individual decisions under risk as well as neighbourhood externalities, which both are known to distort markets. We compare three different micro-level behavioural risk models: expected utility, prospect theory and risk negligence. The flood risk discount on a market level varies significantly, but the results do not rule out any of these models. In general, markets with prospect theory traders overprice risks causing an unrealistically high price differential between risk-prone and risk free properties. The marginal implicit price for flood risk is much closer to empirically found prices in the expected utility and risk negligence models. Additionally we find that individual preferences for neighbourhood quality and multicollinearity in housing attributes can cause a bias in market-level risk valuations of up to +9.7% of a property's value.