For example, one may get anchored to the result of a valuation model and make decisions or negotiate around it. Anchoring and Adjustment Effect in FinanceĪnchoring and adjustment can be seen in many situations in finance. It was only marginally better than business school students with no real estate experience who demonstrated an anchoring index of 48%. The valuation for the properties showed an anchoring index of 41%. Contrary to the claims of the participants, the asking price did indeed serve as an anchor. They were then asked to evaluate the properties. In another experiment conducted with real estate agents, the agents were given booklets with information on houses, including an asking price for the house. On the other hand, those given the 180 feet anchor produced an average estimate of 282 feet. The visitors who were given the 1,200 feet anchor guessed, on average, the height to be 844 feet. The result of the experiment above illustrated the anchoring effect.
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