Purpose This study aims to determine the causality of herding which was traced down to social and normative influences from first-home buyers represented by undergraduate students. Design/methodology/approach The Perception Alignment Hypothesis was used in this experimental research, and was conducted on a sample of 125 undergraduates studying finance representing first-home buyers. The experiment provides the subjects property brochures in Surabaya to appraise a value that they see fit for purchase. The subjects were given both social- and normative-induced treatments separately using information cascade, and their valuation shifts were recorded. Their valuations were then divided into three sections under the treatment groups, consisting of initial, “social’ and “normative’ valuations. Findings In contrast to previous findings, the results showed that first-home buyers succumbed to both social and normative influences, causing them to herd. Further analysis of the credibility of information was conducted and it showed that the undergraduates were only prone to social influence, whereas other aspects regarding normative influences must be further researched. Practical implications The decline of homeownership on a global scale is concerning, especially when 60% of the market represents young adults under the age of 35. This implies that both the government and property developers may need to enact strict measures to regulate property purchases. Originality/value This is the first experimental study on herding of Surabaya, Indonesia, mainly focusing on human behavior and information cascade. Thus, this study could be a viable reflection to future policies in Indonesia being made to answer actual demands in the residential market.
Property buying behavior is part of the development of financial behavior. This research will be focused on the buyers perspectives on residential and commercial properties in Bali Island of Indonesia. Rational and irrational factors are the factors underlying the property buying process. The Physical, Location, Environment, Finance factors were part of the rational; while Psychological (over-confidence, conservatism bias, information and familiarity, herd behavior, mental accounting, and loss aversion), Emotion, Intuitional, Socialization, Evaluation were the irrational part. The purpose of this study was, first, to determine the factors that distinguish buyers behavior toward purchasing a property; second, to determine the factors that distinguish buyers behavior between buyers intending to live in compared to those seeking to invest. The study sample consisted of individuals who are prospective buyers and those who have bought property in Bali. Data were analyzed using Discriminant Analysis. The results showed that only financial factor that had significant impact on buyer decisions. Furthermore, this study also showed that there were significant differences in factors between buyers intending to live in compared to those seeking to invest. The factor were psychology, emotion, intuitional, and evaluation.
Purpose-The dual process of thinking between conscious processes and unconscious processes generate a different decision. Thinking consciously produces rational decisions. However, a person's cognitive limitation makes him or her simplify complex scenarios and think implicitly result in making decision in heuristics or rules of thumbs. This paper aims to evaluate patterns of decision-making relationships and dual motives for home purchasing by first home buyers and family life cycle in Indonesia. Design/methodology/approach-Collecting data was done by distributing questionnaires to home buyers within three years (2013-2016). Further data were processed using ANOVA based on group of dual motives, time for buyer and family life cycle. Findings-The results show that buyers have consumption motives in buying a residence and they behave rational, while investors prefer to buy an apartment and tend to behave heuristics. Dual motives of time for buyers are not significant to decision model. Family life cycle is significant to decision model based on dual motives. Originality/value-This is an unpublished dissertation study to qualify for graduation.
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