Optimization and Game Theoretic Modeling of the Real Estate Development

Gennady A. Ougolnitsky

Contributions to game theory and management, Tome 3 (2010), pp. 303-312

Résumé

A system of the real estate development optimization and game theoretic models is described. A basic role in the proposed system is played by aggregate models of a real estate development company. Those ones are static optimization models aimed at the definition of optimal prices with constraints on the solvent demand. A natural generalization of the basic model is possible in two directions: “horizontally” and “vertically”. First, an interaction of real estate development companies as equal economic agents may be considered. In turn, two model approaches are possible in this case. If we consider competitive relations of development companies without formation of coalitions then non-cooperative games of n players in normal form arise. If a cooperation is admissible (common resources, mergers and acquisitions of development companies) then we get cooperative games. Second, development companies have economic relations with organizations of other types. These relations are hierarchical as a rule, and a development company can be both a Leader (in relations with its suppliers) and a Follower (in relations with its investors, credit institutions, administrative agencies). Respectively, hierarchical game theoretic models arise.

Détail

Keywords: game theory, optimization models, real estate development.