On the effect of anchoring on valuations when the anchor is transparently uninformative

Konstantinos Ioannidis, Theo Offerman and Randolph Sloof
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Konstantinos Ioannidis: University of Amsterdam
Theo Offerman: University of Amsterdam

No 19-074/I, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We test whether anchoring affects people's elicited valuations for a bottle of wine in individual decision making and in markets. We anchor subjects by asking them if they are willing to sell a bottle of wine for a transparently uninformative random price. We elicit subjects' Willingness-To-Accept for the bottle before and after the market. Subjects participate in a double auction market either in a small or a large trading group. The variance in subjects' Willingness-To-Accept shrinks within trading groups. Our evidence supports the idea that markets have the potential to diminish anchoring effects. However, the market is not needed: our anchoring manipulation failed in a large sample.

Keywords: anchoring; replication; market; experiment (search for similar items in EconPapers)
JEL-codes: C91 D91 (search for similar items in EconPapers)
Date: 2019-11-07, Revised 2020-04-27
New Economics Papers: this item is included in nep-des and nep-exp
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Journal Article: On the effect of anchoring on valuations when the anchor is transparently uninformative (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:tin:wpaper:20190074

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