A framework for an effective decision support system in real estate portfolio management
||Krieger, Patrick; Carsten Lausberg
||A framework for an effective decision support system in real estate portfolio management
||23rd Annual European Real Estate Society Conference in Regensburg, Germany
||Introduction: Real estate experts are sometimes faced with decisions of high complexity, so decision quality may vary in a considerable degree. This variation of decision quality is dependent on available information as well as psychological factors. However, decision support systems mainly provide information and only barely decision aids for psychologi-cal factors. Ignoring this human factor may considerably reduce the effectiveness of such systems. Not very surprisingly research on cognitive psychology increasingly finds its way into the DSS domain. However, for real estate portfolio management both DSS research and cognitive research is mainly going unnoticed. In consequence, problems, methods and results on both areas have to be transferred to real estate portfolio management. Objective: This study seeks to fill this gap by developing a framework that integrates deci-sion support into real estate portfolio management software.Method: A development framework is used for organizing existing research divided into 4 interconnected layers: a user perspective, a methods perspective, a systems perspective, and an interface perspective.Results: Decisions made by experts can be differentiated into a part contributing to learn-ing by experience and a part which defies itself from learning effects. Consequently, the methods perspective allows for feedback learning as well as debiasing techniques for an effective DSS. The effectiveness of the DSS can be checked in a cognitive architecture of “state, act and result”, whereas mean deviation and variance between “state” and “result” can be used as measures of effectiveness. Besides, it has to be kept in mind that any regulation is influencing the usage of a DSS, another and important dimension to the concept of effectiveness. Here, the relevance of the “visual experience” of a system, particularly input and output screens as well as navigation, cannot be underestimated. It may adversely affect the usage and increase cognitive biases or learning effects.Conclusion: This article contributes to the literature on decision-making and information technology in real estate and in particular to the application of DSS to real estate manage-ment. The framework offers a way to introduce decision aid capabilities to portfolio man-agement software and provides information on the interactions between the different ele-ments of a DSS. Questions for future research are discussed as well.
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