Decentralized behavioral finance: A behavioral–technological framework for urban freedom and participatory governance

Abstract

Urban inequality and the financialization of housing call for a reconsideration of centralized municipal finance. This study introduces Decentralized Behavioral Finance (DBF), a framework integrating behavioral economics, blockchain infrastructures, and participatory governance to realign individual incentives with collective urban outcomes. Grounded in Sen's capability approach, Nash equilibrium theory, and libertarian paternalism, DBF links tokenization and behavioral design to accessibility, capital efficiency, and cooperative stability. Using longitudinal data for Spain (2000–2024) and evidence from tokenized housing initiatives, the analysis shows that citizen participation and technological adoption are positively associated with governance stability and social housing outcomes, while capital concentration exhibits a negative relationship with stability. The paper advances a formal Cooperative Stability Condition, expressed as a structural inequality, under which decentralized governance remains stable when participation amplified by technological enforcement outweighs concentration pressures. By introducing a testable equilibrium condition rather than a descriptive governance model, the study offers an internationally transferable framework for participatory urban finance focused on transparency, inclusion, and institutional resilience.