School of Management Studies

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Browsing School of Management Studies by Subject "Adaptive market hypothesis"
  • Item
    Evolution of the housing market under the framework of adaptive market hypothesis and martingale difference hypothesis: a case of India
    ( 2021-01-01) Pandey, Richa ; Jessica, V. Mary
    Purpose: The purpose of this study to evaluate the evolving market efficiency of the housing market under the framework of adaptive market hypothesis and martingale difference hypothesis taking a case of India. Design/methodology/approach: The study used a wild bootstrap version of the generalized spectral (GS) test in the rolling window framework to measure possible time-varying linear and non-linear dependence in the housing market. Findings: The study finds that the Indian housing market, in general, is not efficient, and this efficiency is dynamic, which changes with time lending support to the adaptive market hypothesis. The study confirms that the evolutionary model of individuals adapting to a changing environment via behavioural biases affects the efficiency of the housing market, which leads to the evolving efficiency of the housing market prices. Research limitations/implications: The study believes that the potential implications go beyond evolutionary forces and the adaptive market hypothesis, which, does not only depend on an individual's decision-making process but also on social psychology. Thus, a further attempt in this line, taking into account the social psychology and quantitative rigour towards drivers of evolving efficiency is suggested for future research. Practical implications: The study suggests that there is a possibility of extra returns for market players, but not always. The Indian housing market has witnessed several landmark reforms in recent years, so it is believed that these reforms would decrease the inefficiency level of this market. Contrary to this, the study’s findings reveal an increase in the inefficiency level in recent years. As the Indian housing market shows evolving efficiency, it is believed that the increased inefficiency is temporary. The increased inefficiency can be regarded as the settlement stage of the various policy and technical reforms. Originality/value: Confirming the presence or absence of adaptive efficiency in the housing market under possible non-linear dependence will be a significant addition to the existing literature.
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    Sub-optimal behavioural biases and decision theory in real estate: The role of investment satisfaction and evolutionary psychology
    ( 2019-03-20) Pandey, Richa ; Jessica, V. Mary
    Purpose: The purpose of this study is to explain the relationship between behavioural biases, investment satisfaction and reinvestment intention considering the effect of evolutionary psychology. The study believes that biases are not at all times bad; sometimes, biases can assist the individual investor to select the top course of action and allow them to go for the less costly mistakes, thereby helping in achieving satisficing behaviour. Design/methodology/approach: Data were collected using structured and a close-ended questionnaire from a sample of 560 respondents by using multi-stage stratified sampling method. PLS-SEM was used for preliminary validation of the questionnaire. Mediation model using the structural equation model (SEM) with the help of AMOS 20 was used for the analyses. Pre-requisite assumptions for SEM were checked by using sample characteristics. The study has three constructs with multiple items; hence, the instrument validation was done by measuring the construct validity and reliability using Cronbach’s alpha, exploratory factor analysis and confirmatory factor analysis with the help of SPSS 20 and AMOS 20. Findings: The study confirms that behavioural biases influence investment decisions in the real estate market. Further, investment satisfaction is found to have a significant and complementary partial mediating effect. The positive mediating effect of investment satisfaction between behavioural biases and reinvestment intention shows that biases are natural tendencies in response to limit to learning which can be explained by evolutionary psychology. Research limitations/implications: There are chances that the result obtained here is because of myopic decision-making behaviour in which the long-time horizon is not considered and behavioural biases, as well as evolutionary psychology, are adaptive, so the result may change in the long-time horizon, which seeks further investigations. The study talked about the relationship between behavioural biases, investment satisfaction and reinvestment intention; it will be interesting to bring some more constructs in this model, for example, investment intention and reinvestment behaviour; this can deliver a more precise picture in this regard. Practical implications: Understanding such relationships will help in better clarity about the way investment is made. The study confirms that market behaviour in the real estate market is sub-optimal, which shows that there is an opportunity for attentive investors by trading and gathering on information. Real estate practitioners can get clues from market anomalies and investor phenomena; understanding these may suggest ways to use them in the market. Social implications: Reforms in the housing sector do not only satisfy one of the basic needs but also leads to holistic economic development. Besides direct contribution, it contributes to social capital. Originality/value: The study extends the current knowledge base about the relationship between behavioural biases, investment satisfaction and reinvestment intention. This study investigates the behavioural biases influencing the real estate market investment decisions of non-professional investors considering the effect of evolutionary psychology.