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

• Published in: Journal of the Economic Science Association Vol. 6; no. 1; pp. 77 - 94
• Main Authors: Ioannidis, Konstantinos, Offerman, Theo, Sloof, Randolph
• Format: Journal Article
• Language: English
• Published: New York Springer US 01.06.2020; Springer Nature B.V
• Subjects: Behavioral/Experimental Economics; Economic Theory/Quantitative Economics/Mathematical Methods; Economics; Economics and Finance; Game Theory; Meta-analysis; Microeconomics; Operations Research/Decision Theory; Replication Paper; Social and Behav. Sciences; D01; Experiment; Replication; C91; Market; D91; Anchoring; Meta-analysis
• ISSN: 2199-6776; 2199-6784; 2199-6784; 2199-6776
• DOI: 10.1007/s40881-020-00094-1

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. In a concise meta-analysis, we identify the circumstances under which anchoring effects of preferences can be expected.