The role of buy-side anchoring bias: Evidence from the real estate market

Chuang Chang Chang, Ching Hsiang Chao, Jin Huei Yeh

Research output: Contribution to journalArticlepeer-review

13 Scopus citations

Abstract

We examine anchoring bias within the real estate market by evaluating evidence and a priori arguments on the effects of investor sentiment on willingness-to-pay among homebuyers. Based upon a unique dataset which provides the complete histories of transactions in the real estate market, our findings reveal that the anchoring phenomenon prevails regardless of homebuyer's gender. Homebuyers faced with higher systemic uncertainty and out-of-state housing transactions exhibit higher levels of anchoring the heuristic thinking biased on investors' willingness-to-pay gives rise to the deviations from reasonable housing values.

Original languageEnglish
Pages (from-to)34-58
Number of pages25
JournalPacific Basin Finance Journal
Volume38
DOIs
StatePublished - 1 Jun 2016

Keywords

  • Anchoring bias
  • Real estate markets
  • Willingness to pay

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