Booking in the Rain. Testing the Impact of Public Information on Prices

Abstract Weather forecasts are a rare example of public information which is, at the same time, relevant for agents' decisions and entirely exogenous both sides (tourism) market. We develop model where signals good weather have positive impact on accommodation prices, effect being stronger higher accuracy forecast ex-ante uncertainty in conditions. Using data from sea sun destination, we estimate an augmented hedonic price find that results robustly support theory. also response prices to is larger upper-scale hotels than low- mid-scale hotels, result link superior pricing capability former.