Real estate firms operating in the field of tenant representation may represent both tenants and landlords. As such their interests might be in conflict with those of the tenants they represent. A questionnaire was created and sent to 800 individuals. 78% of respondents indicated that they are aware of such conflicts. Meanwhile, only 40% of the respondents perceived such conflicts to be positive rather than negative. A game theoretical model showing how a tenant hires a tenant representative was created with three different scenarios, all using data from the questionnaire to mimic reality as closely as possible. In the first scenario, a tenant hires a representative at one occasion only. In the second scenario a tenant is considering to hire the representative for two sequential transactions. In the third scenario, a contract is introduced to ensure alignment of incentives between the representative and the tenant. The questionnaire and the modelling shows that if no incentivized contract is written the representative always benefits from engaging in conflicting business and, regardless of the conflict of interest and extra benefit to the representative, the tenant always benefits from hiring the representative. However, introducing a contract to align incentives it is shown that there exists a break even point at which the representative starts to benefit from not engaging in business with conflicting interests. Moreover, there exists little correlation between awareness and perceived effect, involvement, or premises size. / Real estate firms operating in the field of tenant representation may represent both tenants and landlords. As such their interests might be in conflict with those of the tenants they represent. A questionnaire was created and sent to 800 individuals. 78% of respondents indicated that they are aware of such conflicts. Meanwhile, only 40% of the respondents perceived such conflicts to be positive rather than negative. A game theoretical model showing how a tenant hires a tenant representative was created with three different scenarios, all using data from the questionnaire to mimic reality as closely as possible. In the first scenario, a tenant hires a representative at one occasion only. In the second scenario a tenant is considering to hire the representative for two sequential transactions. In the third scenario, a contract is introduced to ensure alignment of incentives between the representative and the tenant. The questionnaire and the modelling shows that if no incentivized contract is written the representative always benefits from engaging in conflicting business and, regardless of the conflict of interest and extra benefit to the representative, the tenant always benefits from hiring the representative. However, introducing a contract to align incentives it is shown that there exists a break even point at which the representative starts to benefit from not engaging in business with conflicting interests. Moreover, there exists little correlation between awareness and perceived effect, involvement, or premises size.
| Identifer | oai:union.ndltd.org:UPSALLA1/oai:DiVA.org:kth-172118 |
| Date | January 2015 |
| Creators | Cronsioe, jesper |
| Publisher | KTH, Fastigheter och byggande |
| Source Sets | DiVA Archive at Upsalla University |
| Language | Swedish |
| Detected Language | English |
| Type | Student thesis, info:eu-repo/semantics/bachelorThesis, text |
| Format | application/pdf |
| Rights | info:eu-repo/semantics/openAccess |
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