Exploring Lithuanian Real Estate Crowdfunding Investors’ Rationality

Abstract

The research aims to assess how rational investors are in making real estate crowdfunding investment decisions and weather similar rationality investors share common individual-level characteristics. The research data was collected through an online survey and investors’ rationality was assessed according to risk & return and behavioral biases criteria. Results revealed that 18% of the respondents were rational and as much as 78.1% of them demonstrated bounded rationality behavior. Further clustering of bounded rationality investors identified three distinct clusters and suggested that bounded rationality proved to be largely based on established behavioral biases rather than on failing to understand and apply risk and return criteria. In terms of individual-level characteristics, rationality of real estate crowdfunding investors significantly related to their financial knowledge, but not to their age, sex, income level, education, occupation, residence and interface with finance sector.

Exploring rationality of peer-to-peer lending investors: A conceptual approach and multicriteria-based methodology

“…Similarly, Caglayan et al (2021) used behavioural biases criteria to conclude on investors' bounded rationality. Only a few studies have incorporated both risk and return and available information criteria (Cohen & Kudryavtsev, 2012), risk and return and behavioural biases criteria (Legenzova & Leckė, 2022;Penz et al, 2022) or available information and behavioural biases criteria (Kumar & Goyal, 2016) to explore investors' rationality. A more complex approach to estimating investors behaviour has been recently applied by Sood et al (2024) for traditional investment products.…”