Herding Behavior and Decision-Making within the Middle – Class Residential Property Investments
Keywords:Behavior, herding, social influence, normative influence, information cascade
The main purpose of this study is to investigate the causality of the behavioral bias ‘herding’ that was traced down to both social and normative influences. An experimental method was developed to test 125 participants studying finance. The experiment provides a total of 6 houses in which the participants were instructed to appraise to a value that meets their willingness to purchase. The subjects were treated with social and normative influences and their valuation shifts were observed. In total, three valuations were recorded, labeled ‘initial’, ‘social’, and ‘normative’ valuations respectively. Our findings showed that the undergraduates were susceptible to both social and normative influences. However, further analysis showed that some external factors had a role in causing the herding behavior.
Anastasia, N., Narsa, I. M. and Irwanto, A. (2018). Dual process of dual motives in real estate market Indonesia. International Journal of Housing Markets and Analysis, 12(1), 25-42. doi: https://doi.org/10.1108/IJHMA-05-2017-0049.
Anderson, L.R., Holt, C.A. (1996). Classroom games: information cascades. Journal of Economic Perspectives, 10(4), 187-193. doi: 10.1257/ jep.10.4.187.
Anderson, L.R., Holt, C.A. (1997). Information cascades in the laboratory. The American Economic Review, 87(5), 847-862. doi: 10.2307/295 1328.
Asch, S., Social Psychology, Prentice Hall., New Jersey, Englewood Cliffs, 1952.
Baddeley, M. (2011). Social Influence and Household Decision – Making: A Behavioral Analysis of Household Demand. Department of Education, University of Cambridge.
Baddeley, M. (2016). Housing herding: a behavioural experimental analysis. Working Paper. doi: 10.13140/RG.2.2.30188.36485.
Banerjee, A.V. (1992). A simple model of herd behavior. The Quarterly Journal of Economics, 107(2), 797-817. doi: 10.2307/2118364.
Cohen, Y.A., Man in Adaptation: The Cultural Present, Aldine de Gruyter., New York, 1968.
Dalko, V. (2016). Perception alignment hypothesis: causality of herding? Qualitative Research in Financial Markets, 8(3), 194–204. doi: 10.1108/QRFM-01-2016-0003.
DBSVI - PT. DBS Vickers Sekuritas Indonesia. (Dec 12, 2017). Indonesia industry focus, Indonesia property sector: Not ready to shine yet. DBS Group Research, Equity.
Deloitte. (2016). Deloite Consumer Insights: The Evolution of the Indonesian Consumer. Retrieved September 20, 2017, from https:// www2.deloitte.com/content/dam/Deloitte/jp/Documents/consumer-business/cp/jp-cp-ci2016 idn-eng-1227.PDF.
Diaz, J., Hansz, J.A. (1997). How valuers use the value opinion of others? Journal of Property investment and Investment, 15(3), 256-260. doi: https://doi.org/10.1108/146357897101 84970.
Dreier, P. (1982). The status of tenants in the United States. Social Problems, 30(2), 179– 198. doi: 10.2307/800517.
Goss, D. (2010). Pathways into ﬁrst-home-ownership. Fourth Australasian Housing. Refereed papers presented at the, Sydney, 5th-7th August 2009. https://www.be. unsw.edu.au/sites/default/files/upload/research/centres/cf/seminarsandconferences/2009apnhr_ahrc/papers/Goss.pdf.
Hood, J.K. (1999). The determinants of home ownership: an application of human capital investment theory to the homeownership decision. Honors Projects, IL Wesleyan University, Bloomington, 71. https://digitalcommons.iwu.edu/cgi/viewcontent.cgi?referer=https://www.google.co.id/&httpsredir=1&article=1055&context=econ_honproj.
Hott, C. (2012). The influence of herding behavior on house prices. Journal of European Real Estate Research, 5(3), 179-198. doi: 10. 1108/17539261211282046.
Keynes, J.M., The General Theory of Interest, Employment and Money, Macmillan, London, 1936.
Kumar, S., Goyal, N. (2015). Behavioural biases in investment decision making – a systematic literature review. Qualitative Research in Financial Markets, 7 (1), 88–108. doi: 10. 1108/QRFM-07-2014-0022.
Lamudi. (2017). Laporan Industri Properti Indonesia. Retrieved October 13, 2017, from https://www.lamudi.co.id/laporan-2017.
Lee, Y.T., Liu, Y.J., Roll, R. and Subrahmanyam, A. (2004). Order imbalances and market efficiency: evidence from the Taiwan stock exchange. Journal of Financial and Quantitative Analysis, 39(2), 327-341. doi: 10.1017/S0022109000003094.
Malkiel, B.G. (2003). The efficient market hypothesis and its critics. Journal of Economic Perspectives, 17(1), 59-82. doi: 10.1257/089 533003321164958.
Monico, M. (2013). Australian attitudes and behaviors towards buying their ﬁrst home. RAMS First Home Buyers’ Pulse Check Survey 2013, RAMS Financial Group, Sydney. www.rams.com.au/uploaded-ﬁles/content/about_rams/media_centre/2013/rams-ﬁrst-home-buyerspulse-check-survey.pdf.
Nielsen (2015). Word of mouth recommendations remain the most credible. Nielsen Insights. Retrieved October 19, 2017, from http://www.nielsen.com/id/en/press-room/ 2015/WORD-OF-MOUTH-RECOMMEN-DATIONS-REMAIN-THE-MOST-CREDIBLE. html.
Raafat, R.M., Chater, N., Firth, C. (2009). Herding in humans. Trends in Cognitive Sciences, 13(10), 420-428. doi: 10.1016/j.tics.2009. 08.002.
Rofiq, A. (2007). Pengaruh dimensi kepercayaan (trust) terhadap partisipasi pelanggan e-commerce. Universitas Brawijaya. Retrieved October 19, 2017, from http://ainurrofiq.lec-ture.ub.ac.id/files/2012/03/tesis_ainurrofiq_dimensi_trust.pdf
Scharfstein, D.S., Stein, J.C. (1990). Herd behavior and investment. The American Economic Review, 80(3), 465-479. doi: 10.2307/2006 678.
Seiler, M.J., Lane, M.A., Harrison, D.M. (2014). Mimetic herding behavior and the decision to strategically default. The Journal of Real Estate Finance and Economics, 49(4), 621-653. doi: https://doi.org/10.1007/s11146-012-9386-8.
Shiller, R., Irrational Exuberance. Princeton, Princeton University Press., 2000.
Shusha, A., and Touny, M.A. (2016). The attitudinal determinants of adopting the herd behavior: an applied study on the Egyptian exchange., Journal of Finance and Investment Analysis, 5(1), 55-69.
Smith, A., The Theory of Moral Sentiments, Metalibri., Sao Paolo, 1790.
Szyszka, A. (2010). Behavioral anatomy of the financial Crisis. Journal of Centrum Cathedra, 3(2), 121-135. doi: 10.7835/jcc-berj-2010-0042.
Wang, Y. (2013). Study of herding behavior on China’s real estate market price fluctuations. Information Technology Journal, 12(23), 7926-7929. doi: 10.3923/itj.2013.7926.7929.
Wong, D. (2017). Pengaruh ability, benevolence dan integrity terhadap trust, serta implikasinya terhadap partisipasi pelanggan e-commerce: studi kasus pada pelanggan e commerce di UBM. Jurnal Riset Manajemen dan Bisnis FE-UNIAT, 2(2), 155-168. http://jrmb. ejournal-feuniat.net/index.php/JRMB/article/ download/46/35.
Authors who publish with this journal agree to the following terms:
- Authors retain the copyright and publishing right, and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) followingthe publication of the article, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).<a href="http://creativecommons.org/lice