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A heterogeneous boundedly rational expectation model for housing market

  • Andrew Y. T. Leung (梁以德)Email author
  • Jia-na Xu (徐佳娜)
  • Wing Shum Tsui (崔詠芯)
Article

Abstract

This research aims to test the housing price dynamics when considering heterogeneous boundedly rational expectations such as naive expectation, adaptive expectation and biased belief. The housing market is investigated as an evolutionary system with heterogeneous and competing expectations. The results show that the dynamics of the expected housing price varies substantially when heterogeneous expectations are considered together with some other endogenous factors. Simulation results explain some stylized phenomena such as equilibrium or oscillation, convergence or divergence, and over-shooting or under-shooting. Furthermore, the results suggest that variation of the proportion of groups of agents is basically dependent on the selected strategies. It also indicates that control policies should be chosen carefully in consistence with a unique real estate market during a unique period since certain parameter portfolio may increase or suppress oscillation.

Key words

evolutionary system housing price dynamics heterogeneous expectations 

Chinese Library Classification

O29 O175.14 

2000 Mathematics Subject Classification

39A11 35G25 

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Copyright information

© Shanghai University and Springer Berlin Heidelberg 2009

Authors and Affiliations

  • Andrew Y. T. Leung (梁以德)
    • 1
    Email author
  • Jia-na Xu (徐佳娜)
    • 2
  • Wing Shum Tsui (崔詠芯)
    • 1
  1. 1.Department of Building and ConstructionCity University of Hong KongKowloon, Hong Kong SARP. R. China
  2. 2.Postdoctoral CentreChina Merchants Group LimitedHong Kong SARP. R. China

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