My latest at FEE. An excerpt:
If potential renters had perfect information and deliberated over such decisions with the discipline of a samurai, there would be little need for external rules or regulation. Owners could offer rooms of varying attributes (including price), and each renter would pick the option that he or she liked best. There would be no surprises or regret.
In reality, it is difficult for renters to ascertain whether a room in another city has cockroaches, or the likelihood that one’s car will be stolen if parked outside that building. Furthermore, some people might not have the willpower or wisdom to pay $1 more for a room that has a smoke alarm, rather than a cheaper room that is a death trap in the (unlikely) event of a fire. In this world, we can imagine that without regulation, renters might end up in less desirable rooms than they’d been expecting and would occasionally realize they had made a foolish mistake by not paying enough attention to a certain risk.