A study of boundedly rational behaviour in housing choice: evidence from Malaysia
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 15 October 2021
Issue publication date: 1 December 2022
Abstract
Purpose
Housing choice is always a complicated decision with its dual functions as a roof over the head and as an investment good. This paper aims to investigate the boundedly rational behaviours that affect the housing choice three bounded behaviours play roles in explaining the decision-making behaviour of homebuyers when they acquire/sell a property. These behaviours are endowment effect, loss aversion and herding, which have implications on the decision-making process.
Design/methodology/approach
The research is based on cross-sectional questionnaires and collected from 587 respondents. Factor analysis and reliability tests were used to identify the latent construct of bounded rational housing choice behaviour. In the meantime, the study used one-way analysis of variance (ANOVA) to examine whether there are any differences in the housing choice based on the respondents’ demographic backgrounds.
Findings
The findings indicated that a total of 11 items were reduced to three factors that accounted for the decision-making in housing choice. There are significant differences in herding behaviour amongst respondents with different level of education and their purpose of looking for a house.
Research limitations/implications
This paper helps to identify latent constructs that shed light on the housing choice, especially on the bounded rational behaviour.
Originality/value
This is one of the few studies to explore boundedly rational behaviours in housing choice from the angle of homebuyers. Previous studies addressed housing choice in terms of price, demand and supply in general but not on individual homebuyers. The results will be useful to developers, policymakers, homebuyers as well as scholars in understanding the decision-making process in housing choice.
Keywords
Acknowledgements
The author acknowledges the kind participation of respondents in the research. The author acknowledges the contributions of two anonymous reviewers for their constructive comments and recommendation. The author thanks the Editor, Prof Richard Reed for his consideration and insightful comments.
Citation
Tan, C. (2022), "A study of boundedly rational behaviour in housing choice: evidence from Malaysia", International Journal of Housing Markets and Analysis, Vol. 15 No. 5, pp. 1259-1274. https://doi.org/10.1108/IJHMA-08-2021-0094
Publisher
:Emerald Publishing Limited
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