Agent Based modeling of Housing Asset Bubble: A Simple Utility Function Based Investigation

Kausik Gangopadhyay and Kousik Guhathakurta ()
Additional contact information
Kousik Guhathakurta: Indian Institute of Management, Kozhikode

No 129, Working papers from Indian Institute of Management Kozhikode

Abstract: The housing asset bubble and mortgage crisis of 2007-08 in the US market poses a challenge to understanding of market and hypotheses related to market efficiency. The contribution of our paper is bifold. First, we present a survey of the existing literature which explains the housing asset bubble. We have emphasized on agent based modeling approaches in this context. The second part of the paper frames an economic model to demonstrate the power of irrational “exuberance hypothesis”, a term coined by Robert J Shiller. Using a felicity function based framework, this shows that the power of irrational expectation in bringing about an artificial and unintended boost in demand for investment of housing asset.

Pages: 23 pages
New Economics Papers: this item is included in nep-cmp, nep-hme, nep-upt and nep-ure
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
https://iimk.ac.in/websiteadmin/FacultyPublication ... pers/129abs.pdf?t=01

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iik:wpaper:129

Access Statistics for this paper

More papers in Working papers from Indian Institute of Management Kozhikode IIMK Campus PO, Kunnamanagalam, Kozhikode, Kerala, India -673570. Contact information at EDIRC.
Bibliographic data for series maintained by Sudheesh Kumar ().