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Overbuilding in office markets: are behavioural aspects important?
KTH, School of Architecture and the Built Environment (ABE).
2005 (English)Licentiate thesis, comprehensive summary (Other academic)
Place, publisher, year, edition, pages
Stockholm: KTH , 2005. , 3 p.
Series
Trita-BFE, ISSN 1104-4101 ; 05:69
National Category
Social Sciences
Identifiers
URN: urn:nbn:se:kth:diva-4079ISBN: 91-975358-7-7 (print)OAI: oai:DiVA.org:kth-4079DiVA: diva2:10649
Supervisors
Note
QC 20101125Available from: 2006-08-17 Created: 2006-08-17 Last updated: 2010-11-25Bibliographically approved
List of papers
1. Do investors behave myopically whendeciding to invest in office buildings? Anempirical study using Tobins Q.
Open this publication in new window or tab >>Do investors behave myopically whendeciding to invest in office buildings? Anempirical study using Tobins Q.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The purpose of this paper is to build a regression model using the investment rule “Tobins Q”(TQ). TQ is the quota of the market price and the replacement cost of a good. TQ indicatewhen there is potential in the market to build and sell office buildings. We have used data formarket price, construction cost and production for a period of 22 years for a suburban officemarket in Stockholm. TQ has been regressed on newly produced offices with different timelags. The result indicates that, with our model, we can with TQ decision rule explain theproduction of office space better with a three-year lag on TQ than with no lag. The resultmight indicate that investors have myopic view.

Keyword
TQ, myopic behaviour
National Category
Engineering and Technology
Identifiers
urn:nbn:se:kth:diva-26505 (URN)
Note
QC 20101125Available from: 2010-11-25 Created: 2010-11-25 Last updated: 2010-11-25Bibliographically approved
2. Overbuilding in office markets, a behaviouralapproach to investigate possible explanations.
Open this publication in new window or tab >>Overbuilding in office markets, a behaviouralapproach to investigate possible explanations.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

The purpose of this paper is to apply behavioural theories on the decision-makers in theoffice-building sector. The market has a well-known feature of cycles of production. This cansometimes lead to overbuilding. This paper tries to illuminate the problem with overbuildingby using economic behavioural theory developed the last 25 years. We have formulated sixpossible behavioural explanations for overbuilding. The method we have used is partly byinterviewing investors about specific projects and partly by a survey, which was sent out toindependent persons that has followed the office market for a long time. Our results indicatethat myopic behaviour and sunk cost fallacy have influenced decision makers.

Keyword
Rational behaviour, behavioural economics, herd behaviour, overconfidence, myopic expectations, sunk cost fallacy, confirmation bias, status quo bias.
National Category
Social Sciences
Identifiers
urn:nbn:se:kth:diva-26506 (URN)
Note
QC 20101125Available from: 2010-11-25 Created: 2010-11-25 Last updated: 2010-11-25Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf