Strategic housing decisions and the evolution of urban settlements: Optimality modelling and empirical application in Ulaanbaatar, Mongolia

Investments in housing influence migration and landscape construction,
making them a key component of human-environment interactions. However,
the strategic decision-making that builds residential landscapes is an
underdeveloped area of research in evolutionary approaches to human
behavior. We develop a model of strategic settlement and fit it to data
from Ulaanbaatar, Mongolia. We construct a stochastic dynamic programming
model to explore the trade-offs between building, moving, and saving over
time, finding different trade-offs depending on optimisation scenarios.
Household strategies are estimated using data on 825 households that
settled in the Ulaanbaatar Ger districts between 1942 and 2020. The Ger
districts are areas of self-built housing featuring both mobile dwellings
(gers) and immobile houses (bashins). Using Approximate Bayesian
Computation, we find the parameters of our dynamic programming model that
best fit the empirical data. The model is able to capture the time horizon
of housing changes and their bi-directionality, showing that moving from a
bashin to ger can also be an optimal strategy. However, the model
under-predicts some types of dwelling change; we discuss deviations from
model predictions in relation to housing changes. We identify a more
detailed exploration of risk and population mixes of strategies as key
steps for future research.