The Microscopic Explanation Of The Real Estate Economic Cycle: The Behavioral Economics Approach And Empirical Research

The periodic severe fluctuation of the real estate market is a normal economical phenomenon throughout the world, therefore the question of "what propels the periodic severe fluctuation of the real estate market" logically turned out to be the nuclear concern of any researches on the real estate market (Mankiw & Weil 1992) . People originally only tried to explain away this severe fluctuation from the aspects both of the building-period and the credit of the real estate market; then they tried to dig out the roots of the fluctuation by the approaches both of focusing on the economical analysis and on the anticipation of the rational behaviors of the agents. However, what have been represented by these explanations still seem alien to the real fluctuation in the real estate market.The appearance of the behavioral economics offered a new approach to the economical research. According to the doctrines of behavioral economics, the ultimate solution of the economical problems should be sought in the origins of economics , that is the human-beings as the microcosmic subjects of the market, which can be further defined as their psychological and behavioral factors. Generated by the reflections upon the "anomalies" in the financial market, the behavioral economical methods have only been applied in the area of finance up to now, since the fast-changing character of the financial market could easily expose the psychological and behavioral factors of the agents while these factors are still covered in the connections and movements of various economical variables in other economical areas.The essence of the real estate market lies in being a asset market. Although there are also many "anomalies" in this market, they are either ignored by traditional economics or dismissed by the assumptions on the "rationality" of the agents. Nevertheless, the limitations of the explanations listed above force us to reflex on the assumptions constituting the presuppositions of these explanations: the assumption on the "rationality" of the agents as well as the assumption on the "efficient market". Offering a microcosmic explanation of the periodic fluctuation of the real estate market, this dissertation, however, could be regarded as a result of this kind of reflection.The whole dissertation could be divided in 10 chapters. Chapter One would illustrate the background, significance and the new conceptions of the selection of the topic. Chapter Two would analyze the different explanations of the real estate cycles...