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Anchor effects in appraisals: do information and theoretical knowledge matter?

Anchor effects in appraisals: do information and theoretical knowledge matter? The purpose of this study is to evaluate the impact of theoretical knowledge related to financial behaviour and especially anchor effects.Design/methodology/approachThe study design is based upon an experiment divided into two parts, before and after the development of the course curriculum for the course introducing behavioural finance for undergraduate real estate students.FindingsThe study concludes that the anchor effect is persistent also after introducing theoretical knowledge regarding financial behaviour and anchor effects. To conclude the results, in this study, indicates that the appraisal of properties are dependent on the individual’s cognitive capacity to mitigate anchor effects. There are epistemological assumptions underlying the belief in the individuals’ capacity to handle anchor effects that might provide biased appraisals. These assumptions need to be carefully tested and treated to increase the accuracy of property appraisals.Practical implicationsThe study result also highlights the possibility that current literature in valuation, and learning activities, does not emphases and stimulate readers to critical thinking. This paper would, therefore, propose also other real estate education programmes to be aware of the potential lack of critical thinking among the students.Originality/valueIt provides an insight regarding how appraisal of properties is dependent on the individual’s cognitive capacity to mitigate anchor effects. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of European Real Estate Research Emerald Publishing

Anchor effects in appraisals: do information and theoretical knowledge matter?

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1753-9269
eISSN
1753-9269
DOI
10.1108/jerer-03-2020-0012
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to evaluate the impact of theoretical knowledge related to financial behaviour and especially anchor effects.Design/methodology/approachThe study design is based upon an experiment divided into two parts, before and after the development of the course curriculum for the course introducing behavioural finance for undergraduate real estate students.FindingsThe study concludes that the anchor effect is persistent also after introducing theoretical knowledge regarding financial behaviour and anchor effects. To conclude the results, in this study, indicates that the appraisal of properties are dependent on the individual’s cognitive capacity to mitigate anchor effects. There are epistemological assumptions underlying the belief in the individuals’ capacity to handle anchor effects that might provide biased appraisals. These assumptions need to be carefully tested and treated to increase the accuracy of property appraisals.Practical implicationsThe study result also highlights the possibility that current literature in valuation, and learning activities, does not emphases and stimulate readers to critical thinking. This paper would, therefore, propose also other real estate education programmes to be aware of the potential lack of critical thinking among the students.Originality/valueIt provides an insight regarding how appraisal of properties is dependent on the individual’s cognitive capacity to mitigate anchor effects.

Journal

Journal of European Real Estate Research – Emerald Publishing

Published: Jul 23, 2021

Keywords: Experiment; Valuation; Appraisal; Anchor effects

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