An experimental evaluation of the effect of data presentation on heuristic bias in commercial valuation

This paper reports the results of experiments that examine behavioural aspects of commercial property valuation. Earlier work has suggested that valuers make an early value judgement when undertaking a valuation task. This initial view of value seems to form an 'anchor' which influences the final outcome of the valuation and is one of a number potential anchors investigated by other researchers. This paper reports an experiment that examined whether the mode of data presentation can counter bias resulting from this source. The experiments reported here were undertaken with student valuers and comprised a mock valuation task. A cohort of 45 students drawn from two UK universities were used in the experiment which consisted of two stages. In the first, 23 of the students were assigned randomly to two groups to carry out a valuation task, one with knowledge of the transaction price of the property to be valued, one without. Both groups received the same information including information on ten transactions representing the market evidence. This information was received sequentially. The group with knowledge of the transaction price produced valuations that were biased towards this price. In the second stage of the experiment, 22 students repeated the task, again being divided into two groups. In this case, the information on the transactions was supplemented with a tabulated presentation of the market evidence. In this case there was no apparent bias detected to knowledge of the transaction price. The implications of these findings are discussed.