HOUSING PRICES AND RESIDENTIAL LAND-USE UNDER JOB SITE UNCERTAINTY

This paper examines the effects of job site uncertainty in a multiple center city. It shows that workers sort themselves spatially according to their job site stability. Risk averse workers also respond to the spatial variation in commuting cost risk which offsets the tendency to sort by job site stability. The theory predicts less spatial sorting by commuting costs than the certainty or risk-neutral models predict. House bid prices capitalize the spatial variations in expected travel cost and its variance, leading a flatter price surface than under cert ainty. In addition, risk aversion generates price peaks between employ ment centers. (C) 1998 Academic Press.