Information frictions and incomplete property rights restructuring: evidence from China’s rural homestead reform

This paper examines whether policy cognition is associated with rural households’ stated willingness to participate in China’s homestead reform, which is a case of restructuring layered and incomplete property rights. Using a 2019 survey of 1,355 households in 11 provinces, we estimate probit models for compensated exits and transfers of homestead use rights. A one-point increase in the nine-item policy cognition index is associated with 2.31- and 1.97-percentage-point increases in the two predicted probabilities. The associations remain positive across most alternative estimators and alternative constructions of the policy cognition index. Conditional mixed-process estimates are treated only as sensitivity evidence because the village-peer policy cognition index may reflect shared local conditions. The potential pathway results are consistent with the roles of prior market experience and procedural acceptance of collective recovery but do not establish mediation. The findings support targeted policy communications on eligibility, transaction rules, compensation, inheritance, and postexit security.