Modeling Housing Market Dynamics Using a Multi-agent Simulation of Participants’ Cognitive Behavior

  • Maryam Esmaeili
  • Alberto Vancheri
  • Paolo Giordano


In this work, the housing market is modeled as an adaptive complex system using the multi-agent based modeling approach. By modeling the behavior of the agents who participate in the housing market, study will be made of the dynamics and evolution of housing markets in Lugano and surrounding towns, and the related segregation effects due to different ethnic compositions of neighborhoods. The paper explains the approach we have used in order to model the individual behavior of agents (buyers and sellers), as well as to handle the uncertainty and vagueness of agents’ behaviors, beliefs and decision-making by means of fuzzy type-2 systems. Using type-2 fuzzy rule based systems; we have designed and implemented individual agents with personal behavior and decision-making processes. We present some of the results obtained using the approach proposed.


Membership Function Housing Market Linguistic Term Real Estate Market Adaptive Complex System 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


  1. Alonso W (1964) Location and land use. Harvard University Press, CambridgeGoogle Scholar
  2. Arthur B (2006) Out-of-equilibrium economics and agent-based modeling. In: Judd KL, Tesfatsion L (eds) Handbook of computational economics, vol 2, Agent-based computational economics. Elsevier B.V., Burlington, pp 1551–1564CrossRefGoogle Scholar
  3. Atterhog M, United Nations Economic and Social Commission for Asia and the Pacific (1995) Municipal land management in Asia: a comparative study. United Nations, New YorkGoogle Scholar
  4. Beechey M (2000) The efficient market hypothesis: a survey. Reserve Bank of Australia, SydneyGoogle Scholar
  5. Berrens RP, McKee M (2004) What price nondisclosure? The effects of nondisclosure of real estate sales prices. Soc Sci Q 85(2):509–520CrossRefGoogle Scholar
  6. Borio C, Kennedy N, Prowse SD (1994) Exploring aggregate asset price fluctuations across countries. BIS economic papers, no 40, BasleGoogle Scholar
  7. Brock WA, Durlauf SN (2005) Social interactions and macroeconomics. University of Winsconsin, Madison, Working paperGoogle Scholar
  8. Case B, Goetzmann WN, Wachter SM (1997) The global commercial property market cycles: a comparison across property types. In: 1997 AREUEA international real estate conference, University of California, BerkeleyGoogle Scholar
  9. Castillo O, Melin P (2008) Type-2 fuzzy logic: theory and applications. Springer, BerlinGoogle Scholar
  10. Castillo O, Melin P (2004) Adaptive noise cancellation using type-2 fuzzy logic and neural networks. In: Proceedings of IEEE FUZZ conference, Budapest, pp 1093–1098Google Scholar
  11. Clark W, Huang Y (2003) The life course and residential mobility in British housing markets. Environ Plan A 35:323–339CrossRefGoogle Scholar
  12. Clark W, Onaka J (1983) Life cycle and housing adjustment as explanations of residential mobility. Urban Studies 20:47–57Google Scholar
  13. Corgel JB, Smith HC, Ling DC (1998) Real estate perspectives: an introduction to real estate. McGraw-Hill, BostonGoogle Scholar
  14. Cranor LF, Resnick P (2000) Protocols for automated negotiations with buyer anonymity and seller reputations. Netnomics 2:1–23CrossRefGoogle Scholar
  15. DaVanzo J (1981) Repeat migration, information cost, and location-specific capital. Popul Environ 4(1):45–73CrossRefGoogle Scholar
  16. Deitz R (1998) A joint model of residential and employment location in urban areas. J Urban Econ 44(2):197–215CrossRefGoogle Scholar
  17. Doctor F, Hagras H, Callaghan V (2005) A type-2 fuzzy embedded agent to realise ambient intelligence in ubiquitous computing environments. Inf Sci 171:309–334CrossRefGoogle Scholar
  18. Egenter E, Lux T, Stauffer D (1999) Finite-size effects in Monte-Carlo simulations of two stock market models. Physica A 268:250–256CrossRefGoogle Scholar
  19. Evans AW (1995) The property market: ninety per cent efficient. Urban Stud 32:5–30CrossRefGoogle Scholar
  20. Fama EF (1991) Efficient capital market. J Finance 46(5):1575–1617CrossRefGoogle Scholar
  21. Fama EF (1970) Efficient capital markets: a review of theory and empirical work. J Finance 25:383–417CrossRefGoogle Scholar
  22. Garibaldi JM, Ozen T (2007) Uncertain fuzzy reasoning: a case study in modeling expert decision making. IEEE Trans Fuzzy Syst 15(1):16–30CrossRefGoogle Scholar
  23. Gigerenzer G, Goldstein DG (1996) Reasoning the fast and frugal way: models of bounded rationality. Psychol Rev 103(4):650–669CrossRefGoogle Scholar
  24. Goodman JL (1981) Information, uncertainty, and the microeconomic model of migration decision making. In: DeJong GF, Gardner RW (eds) Migration decision making: multidisciplinary approaches to microlevel studies in developed and developing countries. Pergamon, New York, pp 13–58Google Scholar
  25. Grimm VB, Bastiansen F, Eliassen S, Ginot V, Giske J, Goss-Custard J et al (2006) A standard protocol for describing individual-based and agent-based models. Ecol Model 198:115–126CrossRefGoogle Scholar
  26. Grimm V, Berger U, DeAngelis DL, Polhill JG, Giske J, Railsback SF (2010) The ODD protocol for describing individual-based and agent-based models: a first update. UFZ, Helmholtz Centre for Environmental Research – UFZ, Department of Ecological Modelling, LeipzigGoogle Scholar
  27. Grøtan V, Sæther BE, Engen S, van Balen J, Perdeck A, Visser ME (2009) Spatial and temporal variation in the relative contribution of density dependence, climate variation and migration to fluctuations in the size of great tit populations. J Anim Ecol 78:447–459CrossRefGoogle Scholar
  28. Hagras H (2004) A hierarchical type-2 fuzzy logic control architecture for autonomous mobile robots. IEEE Trans Fuzzy Syst 12(4):524–539CrossRefGoogle Scholar
  29. Herrin WE, Kern CR (1992) Testing the standard urban model of residential choice – an implicit markets approach. J Urban Econ 31(2):145–163CrossRefGoogle Scholar
  30. Muth JF (1961) Rational expectations and the theory of price movements. Econometrica 29:315–335CrossRefGoogle Scholar
  31. Jennings NR, Faratin P, Lomuscio AR, Parsons S, Sierra C, Wooldridge M (2001) Automated negotiation: prospects, methods, and challenges. Int J Group Decis Negot 10:199–215CrossRefGoogle Scholar
  32. Kan K (2007) Residential mobility and social capital. J Urban Econ 61(3):436–457CrossRefGoogle Scholar
  33. Kano N, Seraku N, Takahashi F, Tsuji S (1984) Attractive quality and must-be quality. J Jpn Soc Qual Control 14:39–48Google Scholar
  34. Karnik NN, Mendel JM (2001) Operations on type-2 fuzzy sets. Fuzzy Sets Syst 122:327–348CrossRefGoogle Scholar
  35. Katzner D (1989) The Walrasian vision of the microeconomy: an elementary exposition of the structure. University of Michigan Press, Ann ArborGoogle Scholar
  36. Kirman AP (1992) Whom or what does the representative individual represent. J Econ Perspect 6(2):117–136CrossRefGoogle Scholar
  37. Kulr GJ, Yuan YB (1995) Fuzzy sets and fuzzy logic: theory and applications. Prentice Hall PTR, Upper Saddle RiverGoogle Scholar
  38. Kummerow M, Lun JC (2005) Information and communication technology in the real estate industry: productivity, industry structure and market efficiency. Telecomm Policy 29:173–190CrossRefGoogle Scholar
  39. Lee CH, Lin YC, Lai WY (2003) Systems identification using type-2 fuzzy neural network (Type-2 FNN) systems. In: IEEE international symposium on computational intelligence in robotics and automation, Vol. 3. Kobe, pp 1264–1269Google Scholar
  40. Lo AW (1997) Market efficiency: stock market behaviour in theory and practice, vol I. An Elgar Reference Collection, Cheltenham, pp xii–xiiiGoogle Scholar
  41. Louviere J, Timmermans H (1990) Hierarchical information integration applied to residential choice behavior. Geogr Anal 22(2):127–144CrossRefGoogle Scholar
  42. Maier G, Herath S (2009) Real estate market efficiency: a survey of literature. Research Institute for Spatial and Real Estate Economics, WienGoogle Scholar
  43. Malkiel BG (1996) A random walk down wall street. W.W. Norton, New YorkGoogle Scholar
  44. Malpezzi S, Wachter SM (2005) The role of speculation in real estate cycles. J Real Estate Lit 13:143–164Google Scholar
  45. Manski CF (2000) Economic analysis of social interactions. J Econ Perspect 14(3):115–136CrossRefGoogle Scholar
  46. Mendel JM (2001) Uncertain rule-based fuzzy logic systems: introduction and new directions. Prentice-Hall, Upper-Saddle RiverGoogle Scholar
  47. Mendel JM, John RI (2002) Type-2 fuzzy sets made simple. IEEE Trans Fuzzy Sets 10(2):117–127CrossRefGoogle Scholar
  48. Oliver RL (1980) A cognitive model of the antecedents and consequences of satisfaction decisions. J Mark Res 17(4):640–649CrossRefGoogle Scholar
  49. Ozen T, Garibaldi JM (2003) Investigating adaptation in type-2 fuzzy logic systems applied to umbilical acid-base assessment. In: Proceedings of the 2003 European symposium on intelligent technologies, Oulu, pp 289–294Google Scholar
  50. Phipps AG, Carter JE (1984) An individual-level analysis of the stress-resistance model of household mobility. Geogr Anal 16(1):176–189Google Scholar
  51. Portugali J, Benenson I, Omer J (1994) Socio-spatial residential dynamics: stability and instability within a self-organized city. Geogr Anal 26(4):321–340CrossRefGoogle Scholar
  52. Rossi PH (1955) Why families move: a study in the social psychology of urban residential mobility. Free Press, New YorkGoogle Scholar
  53. Samuelson P (1965) Proof that properly anticipated prices fluctuate randomly. Ind Manag Rev 6:41–49Google Scholar
  54. Schachter J (2001) Why people move: exploring the March 2000 current population survey. U.S. Census Bureau, Washington, DCGoogle Scholar
  55. Schweitzer F (2009) Economic networks: what do we know and what do we need to know? ACS: Adv Complex Syst 12(4):407–422CrossRefGoogle Scholar
  56. Simon HA (1982) Models of bounded rationality. MIT Press, CambridgeGoogle Scholar
  57. Simon HA (1987) Rationality in psychology and economics. In: Reder MW (ed) Rational choice: the contrast between economics and psychology. University of Chicago Press, ChicagoGoogle Scholar
  58. Speare A (1974) Residential satisfaction as an intervening variable in residential mobility. Demography 11:173–188CrossRefGoogle Scholar
  59. Speare A, Goldstein S, Frey WH (1975) Residential mobility, migration and metropolitan change. Ballinger, CambridgeGoogle Scholar
  60. Takayama A (1985) Mathematical economics, 2nd edn. Cambridge University Press, Cambridge, UKGoogle Scholar
  61. Tesfatsion L (2006) Agent-based computational economics: a constructive approach to economic theory. In: Tesfatsion L, Judd KL (eds) Handbook of computational economics, vol 2, Agent-based computational economics. Elsevier B.V., Burlington, pp 831–880CrossRefGoogle Scholar
  62. Torrens PM (2000) How cellular models of urban systems work. CASA working paper 28, University College London, LondonGoogle Scholar
  63. van Ommeren JP, Nijkamp P (1996) Residence and workplace relocation: a bivariate duration model approach. Geogr Anal 28(4):315–329CrossRefGoogle Scholar
  64. Veldhuisen J, Timmermans H (1984) Specification of individual residential utility function: a comparative analysis of three measurement procedures. Environ Plan A 16:1573–1582CrossRefGoogle Scholar
  65. Ward M (2005) The role of immigration in the decline of an isolated migratory bird population. Conserv Biol 19:1528–1536CrossRefGoogle Scholar
  66. Wheaton WC (1999) Real estate cycles: some fundamentals. Real Estate Econ 27(2):209–230CrossRefGoogle Scholar
  67. Wu D, Mendel JM (2008) Aggregation using the linguistic weighted average and interval type-2 fuzzy sets. IEEE Trans Fuzzy Syst 16(6):1664–1666CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Maryam Esmaeili
    • 1
    • 2
  • Alberto Vancheri
    • 1
    • 2
  • Paolo Giordano
    • 1
    • 2
  1. 1.Accademia di ArchitetturaUniversità della Svizzera ItalianaMendrisioSwitzerland
  2. 2.University of LuganoLuganoSwitzerland

Personalised recommendations