Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market

 

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dc.contributor.advisor Evans, Kathleen en_ZA
dc.contributor.author Sui Sang How, Jesse Jefferson en_ZA
dc.date.accessioned 2017-01-23T07:36:52Z
dc.date.available 2017-01-23T07:36:52Z
dc.date.issued 2016 en_ZA
dc.identifier.citation Sui Sang How, J. 2016. Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market. University of Cape Town. en_ZA
dc.identifier.uri http://hdl.handle.net/11427/22864
dc.description.abstract Purpose: The valuation tasks for manual valuation are time-demanding and cognitively challenging. Behaviourists have observed that valuation accuracy and variations are mainly caused by human adaptive approaches called cognitive shortcuts. Of particular interest for valuation tasks is the susceptibility of decision makers to anchoring heuristics. The anchoring and adjustment approach is a mental shortcut which involves deliberate and conscious adjustment of values, known to be wrong but close to a right answer. Various studies have shown that valuers are prone to anchoring to asking price, previous estimate and other reference points. The incidence of valuation bias in the property market and the world is of concern. Few studies have used the decision-support tool to reduce property appraisal bias. The research purpose is therefore to determine the efficacy of the decision-support tool in reducing and eliminating property appraisal bias in the South African property market. Design/methodology/approach: Similar to previous behavioural studies, a controlled experimental study design was used. The experimental design is based on a previous German study that uses a self-written valuation software in a MS Excel package, adapted to the South African market. The software comprises two versions, a standard software and a decision-support software, which were administered to separate groups of novices and experts. Descriptive statistics and non-parametric testing were used to interpret the results. Findings: Consistent with other research on valuation accuracy and variations, the findings show that the valuation outcomes do not align with 'margin of errors' concept. Despite the results not being as robust as one would have expected, the study revealed that test subjects were susceptible to the anchoring effects and that use of a decision-support tool can help to reduce valuation variations. Practical implications: This study heightened the need to counter the effect of bias in valuation. The high variance among the experts group is of concern and should be addressed. Other forms of cognitive shortcuts used by valuers should be incorporated into the decision-support tool, and a similar test run for different valuation settings. The behavioural contentions should be discussed and presented to novices and experts. en_ZA
dc.language.iso eng en_ZA
dc.subject.other Property Studies en_ZA
dc.title Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market en_ZA
dc.type Master Thesis
uct.type.publication Research en_ZA
uct.type.resource Thesis en_ZA
dc.publisher.institution University of Cape Town
dc.publisher.faculty Faculty of Engineering and the Built Environment
dc.publisher.department Department of Construction Economics and Management en_ZA
dc.type.qualificationlevel Masters
dc.type.qualificationname MSc (Eng) en_ZA
uct.type.filetype Text
uct.type.filetype Image
dc.identifier.apacitation Sui Sang How, J. J. (2016). <i>Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market</i>. (Thesis). University of Cape Town ,Faculty of Engineering & the Built Environment ,Department of Construction Economics and Management. Retrieved from http://hdl.handle.net/11427/22864 en_ZA
dc.identifier.chicagocitation Sui Sang How, Jesse Jefferson. <i>"Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market."</i> Thesis., University of Cape Town ,Faculty of Engineering & the Built Environment ,Department of Construction Economics and Management, 2016. http://hdl.handle.net/11427/22864 en_ZA
dc.identifier.vancouvercitation Sui Sang How JJ. Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market. [Thesis]. University of Cape Town ,Faculty of Engineering & the Built Environment ,Department of Construction Economics and Management, 2016 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/22864 en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Sui Sang How, Jesse Jefferson AB - Purpose: The valuation tasks for manual valuation are time-demanding and cognitively challenging. Behaviourists have observed that valuation accuracy and variations are mainly caused by human adaptive approaches called cognitive shortcuts. Of particular interest for valuation tasks is the susceptibility of decision makers to anchoring heuristics. The anchoring and adjustment approach is a mental shortcut which involves deliberate and conscious adjustment of values, known to be wrong but close to a right answer. Various studies have shown that valuers are prone to anchoring to asking price, previous estimate and other reference points. The incidence of valuation bias in the property market and the world is of concern. Few studies have used the decision-support tool to reduce property appraisal bias. The research purpose is therefore to determine the efficacy of the decision-support tool in reducing and eliminating property appraisal bias in the South African property market. Design/methodology/approach: Similar to previous behavioural studies, a controlled experimental study design was used. The experimental design is based on a previous German study that uses a self-written valuation software in a MS Excel package, adapted to the South African market. The software comprises two versions, a standard software and a decision-support software, which were administered to separate groups of novices and experts. Descriptive statistics and non-parametric testing were used to interpret the results. Findings: Consistent with other research on valuation accuracy and variations, the findings show that the valuation outcomes do not align with 'margin of errors' concept. Despite the results not being as robust as one would have expected, the study revealed that test subjects were susceptible to the anchoring effects and that use of a decision-support tool can help to reduce valuation variations. Practical implications: This study heightened the need to counter the effect of bias in valuation. The high variance among the experts group is of concern and should be addressed. Other forms of cognitive shortcuts used by valuers should be incorporated into the decision-support tool, and a similar test run for different valuation settings. The behavioural contentions should be discussed and presented to novices and experts. DA - 2016 DB - OpenUCT DP - University of Cape Town LK - https://open.uct.ac.za PB - University of Cape Town PY - 2016 T1 - Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market TI - Reducing the property appraisal bias with decision support systems: an experimental investigation in the South African property market UR - http://hdl.handle.net/11427/22864 ER - en_ZA


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