Consumer house price judgements: new evidence of <italic>anchoring</italic> and <italic>arbitrary coherence</italic>
Individuals are prone to significant errors when making value judgements through the use of <italic>heuristics</italic> (cognitive short cuts) to simplify decision making. This paper uses an economic experiment to investigate the strength of arbitrary <italic>anchors</italic> in judgements over house prices among a student group, which shares similarities with first-time buyers. The study represents an extension of existing property research literature on valuation because it focuses on consumers, not professionals, and uses experiments which are incentivised. Additionally it investigates the evolution of price estimates over multiple sequential property viewings. The results indicate that even in the presence of significant, binary incentives for accurate judgement, individuals rely, to a significant degree, on an arbitrarily established anchor value. Such anchors remain powerful enough for transitions to subsequent valuations to remain influenced by this initial value. This is interpreted as a confirmation -- and extension -- of the <italic>arbitrary coherence</italic> reported in other studies of consumer judgement.
Year of publication: |
2011
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Authors: | Scott, Peter J. ; Lizieri, Colin |
Published in: |
Journal of Property Research. - Taylor & Francis Journals, ISSN 0959-9916. - Vol. 29.2011, 1, p. 49-68
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Publisher: |
Taylor & Francis Journals |
Saved in:
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