Reducing The Property Appraisal Bias With Decision Support Systems — A Two-Country, Two-Method Experiment

Any appraiser is subject to many potentially biasing influences which compromise the accuracy of the appraisal. One of these possible biases is the anchoring heuristic. While many studies have proven the existence and importance of the anchoring effect in real estate appraisals, very few studies have suggested practical means to counter it. In this paper we demonstrate that the anchoring effect can be reduced if appraisers are supported by a computer software which helps them to detect possible anchors.In our experiment we asked experienced valuers and novices to perform a mock valuation of a small office building, based on a set of documents and with the help of a self-made valuation software. Each test person received one of the three versions of the software in order to test its influence on the appraised values: The standard version was a simple Microsoft Excel spreadsheet with no features for debiasing. The modified version contained two features to inform the test person about the anchoring effect, namely a written warning and a graph. The third version included several features that were found to reduce the anchoring effect in previous experiments, such as warnings, better information display, and help texts.The experiment was carried out in South Africa and Germany. The comparison of the two sub-samples which used different properties and valuation methods adds to our understanding of how decision-support systems can improve valuation accuracy.