CONFIRMATION BIAS IN THE VALUATION PROCESS

Abstract

In the past, the concept of valuation accuracy in Singapore had been sheltered behind the argument that valuation is an inexact art. However, there is a growing awareness of the importance of identifying the existence of bias in valuers' behaviour, knowing that such can lead to biased or inefficient decisions. The focus of this study is on one such biasness, that being confirmation bias. This study documents an investigation of the characteristics of confirmation bias and its existence in valuers' behaviour during the valuation process. The literature on the various heuristics and particularly confirmation bias were explored to build a theoretical and empirical base. Research methods involved surveying the valuers to explore their behaviour at certain stages of the valuation process. The analysis of data gathered through a series of testing revealed the existence of some bias characteristics. However, the strong support expected for the contention that valuers exhibit confirmatory bias was not found, as the results were not statistically significant.