Heterogeneous Boundedly Rational Expectation Model for Housing Market

LEUNG Andrew Y T; XU Jia-na; TSUI Wing-shum

doi:10.3879/j.issn.1000-0887.2009.10.010

Volume 30 Issue 10

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LEUNG Andrew Y T, XU Jia-na, TSUI Wing-shum. Heterogeneous Boundedly Rational Expectation Model for Housing Market[J]. Applied Mathematics and Mechanics, 2009, 30(10): 1223-1233. doi: 10.3879/j.issn.1000-0887.2009.10.010

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Heterogeneous Boundedly Rational Expectation Model for Housing Market

doi: 10.3879/j.issn.1000-0887.2009.10.010

Department of Building and Construction, City University of Hong Kong, Hong Kong, P. R. China;
Postdoctoral Centre, China Merchants Group Limited, 27/F, China Merchants Tower, Shun Tak Centre, 168-200 Connaught Rd. C., Hong Kong SAR, P. R. China

Received Date: 2008-10-05
Rev Recd Date: 2009-08-26
Publish Date: 2009-10-15

Abstract

Abstract

The housing price dynamics was tested when considering heterogeneous boundedly rational expectations, such as naive expectation, adaptive expectation and biased belief. Housing market was investigated as an evolutionary system with heterogeneous and competing expectations. The results show that the dynamics of the expected housing pricevaries substantially when heterogeneous expectations are considered together with some other endogenous factors. The 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 the variation of the proportion of each group of the agents is basically dependent on the selected strategies. It is indicated that control policies should be chosen carefully in consistence with a uniquereal estate market during a unique period since some certain parameters portfolio mayincrease or suppress the oscillation.
- evolutionary system,
- housing price dynamics,
- heterogeneous expectations

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References(19)

References

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