Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)

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Explanation for Real Estate Speculative Bubbles Using Game Theory

Authors
Xinran Li1, †, Sitong Liu2, †, Dahe Zhang3, †, Haoyuan Zhu4, †, *
1Beijing ETown Academy, Beijing, 100176, China
2Suzhou Foreign Language School, Suzhou 215000, China
3The High School Affiliated to Renmin University of China, Beijing 100080, China
4Department of Economics, School of Social Sciences, University of Manchester, M13 9PL, Manchester, UK
†

These authors contributed equally.

*Corresponding author. Email: haoyuan.zhu@student.manchester.ac.uk
Corresponding Author
Haoyuan Zhu
Available Online 26 March 2022.
DOI
10.2991/aebmr.k.220307.018How to use a DOI?
Keywords
Real estate; Speculative bubbles; Game theory; Equilibrium
Abstract

It is well-established that the real estate markets in different countries were under different conditions depending on the nation’s policies. This research aims to determine the dominant strategy and the strategic belief for both developers and homebuyers in the Chinese real estate market. The market was classified into two conditions (rational exuberance and irrational exuberance) and was analyzed using a “dynamic game of incomplete information” model. The probability of beliefs was calculated using the posterior belief. The result showed the developer’s dominant strategy is to raise the price in a rational exuberance market whereas the homebuyer’s dominant strategy is to stabilize the demand in an irrational exuberance market. According to the perfect Bayesian equilibrium found in the game model, the results also proved that both developer’s and the homebuyer’s strategic beliefs have relied on the other’s income and belief.

Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

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Volume Title
Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
Series
Advances in Economics, Business and Management Research
Publication Date
26 March 2022
ISBN
978-94-6239-554-1
ISSN
2352-5428
DOI
10.2991/aebmr.k.220307.018How to use a DOI?
Copyright
© 2022 The Authors. Published by Atlantis Press International B.V.
Open Access
This is an open access article under the CC BY-NC license.

Cite this article

risenwbib
TY  - CONF
AU  - Xinran Li
AU  - Sitong Liu
AU  - Dahe Zhang
AU  - Haoyuan Zhu
PY  - 2022
DA  - 2022/03/26
TI  - Explanation for Real Estate Speculative Bubbles Using Game Theory
BT  - Proceedings of the 2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022)
PB  - Atlantis Press
SP  - 112
EP  - 117
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.220307.018
DO  - 10.2991/aebmr.k.220307.018
ID  - Li2022
ER  -