Modeling residential relocation choices: An egalitarian bargaining approach and a comparative study

Abstract

Accompanying the rapid urban expansion and fast population growth is a progressive trend of residential relocation in developing countries, which necessitates a thorough understanding of households’ relocation decisions. Previous studies generally treated home relocation as an individual or unitary household decision, ignoring the interactive and collaborative decision-making mechanisms that household members may adopt when making group decisions. In view of this research gap, this study examines the feasibility of applying the egalitarian bargaining approach to simulating households’ group decisions concerning residential relocation and further compares its performance with the Nash bargaining and the conventional utilitarian approach. Moreover, the study experiments with the possibility of accommodating three possible group decision-making mechanisms using the latent class modeling framework. The proposed modeling approaches are applied to an empirical case study in Beijing. Results show that models based on the egalitarian and Nash bargaining principles have better model fits than the utilitarian principle, suggesting the importance of considering egalitarianism when modeling household members’ collaborative choice on residential relocation. Moreover, the model based on Nash bargaining has the best model fit, indicating that instead of merely seeking egalitarianism or utilitarianism, household members are more likely to strike a balance between fairness and efficiency.