Shane modelled the matching of buyers and sellers in the housing market in Singapore amidst search frictions, with two key characteristics. First, agents are heterogenous. An agent’s value of search depreciates over time if they stay without a match in the market. They start out as “relaxed”, that is they have a high value of searching within the market, but if they stay without a match in the market for an extended period of time, they naturally start to become “desperate” and end up having a lower value of search. Second, agents have access to two markets; buyers have access to the public (Built-To-Order) market and the private resale market while sellers have access to the same resale market and a rental market.

He predicts how two government policies, increasing the supply of BTO homes, and reducing the prices of such houses, impact the way agents match in the market. He finds that because a “desperate” buyer is more eager for a match relative to “relaxed” buyer, an increase in the supply of BTO homes almost always benefits this “desperate” buyer more because it directly allows for a match to happen “faster”. However, a reduction in the price of BTO homes only affects the payoff from matching (thus increasing the value of search) and not directly the rate of matching. This policy almost always benefits the “relaxed” buyer more than their “desperate” counterpart since it incentivizes them to opportunistically wait for a “desperate” seller for a better net gain.