Abstract:
This paper explores how property market participants engage in the process of making value judgements. More specifically it investigates how being exposed to a residential property impacts the perception of the probable selling price of an unrelated subsequent property and the influence of decision makers' level of training on these value judgements. Property literature suggests that the use of heuristics (or cognitive short cuts), in particular the effect of anchoring and adjustment, may affect value judgements of a subsequent property. The marketing literature provides evidence of the direction of these adjustments by way of assimilation and contrast effects. The effects of the amount of market knowledge and experience have also been shown to affect the use of heuristics but the level of training has not previously been isolated. This paper consists of an experiment comprising 225 Undergraduate Property students from the University of Auckland, New Zealand. The results indicate that the context and the use of heuristics do affect value judgements. More specifically they suggest that contrast or assimilation effects may result depending on the level of prior training of the decision maker, the comparability of the properties being examined and the level of uncertainty surrounding the estimation of the perceived sales price.
