Kouwenberg, RZwinkels, R. C.Mahidol University. College of Management2016-02-262017-11-102016-02-262017-11-102016-02-262015Plos One. Vol.10, No.6 (2015), e0129070https://repository.li.mahidol.ac.th/handle/20.500.14594/3107Economic history shows a large number of boom-bust cycles, with the U.S. real estate market as one of the latest examples. Classical economic models have not been able to provide a full explanation for this type of market dynamics. Therefore, we analyze home prices in the U.S. using an alternative approach, a multi-agent complex system. Instead of the classical assumptions of agent rationality and market efficiency, agents in the model are heterogeneous, adaptive, and boundedly rational. We estimate the multi-agent system with historical house prices for the U.S. market. The model fits the data well and a deterministic version of the model can endogenously produce boom-and-bust cycles on the basis of the estimated coefficients. This implies that trading between agents themselves can create major price swings in absence of fundamental news.engMahidol UniversityEndogenousPrice bubblesMulti-agent systemHousing marketOpen Access articleResearch ArticlePLOS ONE10.1371/journal.pone.0129070