LocSim: A probabilistic model of choice heuristics

Abstract

The growing interest that policy-makers show in housing-market processes on local and regional housing markets has stimulated the development of local housingmarket models. Housing corporations, municipal boards, and (institutional) developers try to get a firmer and more effective grip on the housing market. To that end, they need more insight in the effects of building programs. Specifically, they need to know the effects on vacancy chains and the reduction of the unbalanced relation between housing costs and income. They want to assess which policy measures regarding both building programs and allocation rules - are most effective in getting these dwellings to these households that they are intended for. LocSim can provide insight in these and related issues. The interaction between demographic development and the housing market is central to LocSim. This interaction arises from decision processes with respect to relocation and housing search that are instigated at the household level. This paper focuses on the housing market model of LocSim. The main task of that model is to match demand and supply on the housing market using a method that explicitly models a household's search behavior. Section 2 gives a general outline of LocSim, showing the position of the housing market model. The third section briefly reviews the conceptual ideas of the housing market model. It discusses concepts such as search intensity, search duration, and sectoral and spatial substitution of housing preferences. The fourth section then outlines the model of decision-making that follows from these concepts: the probabilistic heuristic search model. This represents a method derived from the decision plan net (IDID) approach. The fifth section presents some preliminary results of the model.