Dual Agency Representation: Incentive Conflicts or Efficiencies?

Abstract

This study examines potential incentive misalignments and informational efficiencies associated with dual agency and the degree to which those effects vary over a listing contract. The analysis generates hypotheses about timing of dual agency and its impact on selling price. Probit estimates indicate that dual agency is more likely to occur at the beginning and end of a listing contract. In both periods dual agency transactions result in lower prices than sales in which different agents or firms represent the seller and buyer. Results are consistent with the hypothesis that dual agency given these situations may be the result of incentive misalignments.

Keywords: Dual Agency, Principal Agent