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

What is it about?

Abstract The aim of this study is to evaluate the impact of theoretical knowledge related to financial behaviour and especially anchor effects. The study design is based upon an experiment divided in two parts, before and after development of the course curriculum for the course introducing behavioural finance for undergraduate real estate students. The study conclude 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 appraisal of properties are dependent on the individual´s cognitive capacity to mitigate anchor effects. There are epistemological assumptions underlying our belief in the individuals´ capacity to handle anchor effects that might provide biased appraisals. These assumptions need to be carefully tested and treated in order to increase the accuracy of property appraisals. The study result also highlights the possibility that current literature in valuation, and learning activities, does not emphases and stimulate readers to critical thinking. We would therefore propose also other real estate education programs to be aware of the potential lack of critical thinking among the students. It provides an insight regarding how appraisal of properties is dependent on the individual´s cognitive capacity to mitigate anchor effects.

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