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Reducing the Appraisal Bias in Manual Valuations with Decision Support Systems

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Book cover Advances in Automated Valuation Modeling

Part of the book series: Studies in Systems, Decision and Control ((SSDC,volume 86))

Abstract

Any appraiser is subject to many biasing influences which compromise the accuracy of the appraisal. One of the most prominent biases is the anchoring heuristic: appraisers involuntarily anchor to reference points such as their previous valuation, the value opinion of the seller, or the last transaction price. While many studies have proven the importance of the anchoring effect, very few studies have suggested practical means to counter it. In this chapter we demonstrate that the effect can be reduced with a tool helping the valuer to make better decisions. In our experiment probands appraised an office building with the help of a self-written valuation software. The software came in three versions with different features for debiasing in order to test its influence on the appraised values. It turned out that the probands who used the decision support version of the software produced significantly less dispersed market values than the others.

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Notes

  1. 1.

    See Crosby et al. (1998) and Babawale and Omirin (2012) for a review of the literature in this field.

  2. 2.

    For a literature review see, for example, Amidu (2011).

  3. 3.

    For a literature review see Tidwell (2011) and Bhandari et al. (2008).

  4. 4.

    For a general literature survey see Furnham and Boo (2011).

  5. 5.

    We adjusted the test for small and different sized samples with the method of Noguchi and Gel (2009).

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Authors and Affiliations

  1. Institute for Real Estate Information Technology, Nürtingen-Geislingen University, Geislingen/Steige, Germany

    Carsten Lausberg & Anja Dust

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  1. Carsten Lausberg
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  2. Anja Dust
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Correspondence to Carsten Lausberg .

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Editors and Affiliations

  1. Property Valuation & Investment DICATECh, Technical University Politecnico di Bari, Bari, Italy

    Maurizio d'Amato

  2. School of the Built Environment, Oxford Brookes University, Headington, Oxfordshire, United Kingdom

    Tom Kauko

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Lausberg, C., Dust, A. (2017). Reducing the Appraisal Bias in Manual Valuations with Decision Support Systems. In: d'Amato, M., Kauko, T. (eds) Advances in Automated Valuation Modeling. Studies in Systems, Decision and Control, vol 86. Springer, Cham. https://doi.org/10.1007/978-3-319-49746-4_18

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  • DOI: https://doi.org/10.1007/978-3-319-49746-4_18

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  • Online ISBN: 978-3-319-49746-4

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