Overbuilding in office markets, a behaviouralapproach to investigate possible explanations.

• The purpose of this paper is to apply behavioural theories on the decision-makers in theoffice-building sector. The market has a well-known feature of cycles of production. This cansometimes lead to overbuilding. This paper tries to illuminate the problem with overbuildingby using economic behavioural theory developed the last 25 years. We have formulated sixpossible behavioural explanations for overbuilding. The method we have used is partly byinterviewing investors about specific projects and partly by a survey, which was sent out toindependent persons that has followed the office market for a long time. Our results indicatethat myopic behaviour and sunk cost fallacy have influenced decision makers.

Nyckelord

Rational behaviour

behavioural economics

herd behaviour

overconfidence

myopic expectations

sunk cost fallacy

confirmation bias

status quo bias.

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