Many countries have introduced Energy Performance Certificates (EPCs) to mitigate
information asymmetry problems with respect to the thermal quality of houses. Using big data
on real estate advertisements that cover large parts of the German housing market, this paper
empirically investigates the consequences of a shift from a voluntary to a mandatory quality
disclosure regime on the offer prices of houses. Illustrated by a stylized theoretical model, we
test the following key hypothesis: Prices for houses whose owners would not voluntarily disclose
their house’s energy consumption in real estate advertisements should decrease upon a
shift to a mandatory disclosure scheme. Employing an instrumental variable approach to cope
with the endogeneity of disclosure decisions, our analysis demonstrates the relative advantage
of mandatory over voluntary disclosure rules
