Improving the purchase decision in real estate asset management by debiasing decision-makers

The question how real estate investment decisions should be made and are actually made has been extensively discussed in the literature. However, some behavioral aspects such as the effect of the anchoring bias on the quality of purchase decisions or the effectiveness of debiasing strategies have been neglected so far. It can be assumed that these aspects greatly influence decision-making in real estateÑ-as has been convincingly shown for other areas.This paper examines whether the anchoring effect occurs in real estate asset management and if this bias can be minimized using debiasing-strategies. To answer our research question we set up an experiment in which we asked 152 real estate experts to form an opinion about the ceiling price for a property described in an investment memorandum. We found that the probands anchored their opinion to the given offering price. That was in line with our expectations and the previous literature. But we also found that a simple debiasing strategy, considering a worst-case scenario, significantly reduced the unwanted anchoring effect. The results show that there are promising ways to improve decision-making. More research is needed until our findings can be incorporated in decision processes and decision support systems.