Anchoring Effect in Real Litigation: An Empirical Study

Abstract

Given the wide acceptance of how anchoring affects human decision-making in almost all disciplines of social science, one is surprised to find that the empirical, rather than experimental, evidence is rare and inconclusive. This article offers the first large-scale court evidence for the anchoring effect in judicial decision-making. Using Taiwan’s court cases on trespassing, matched with transaction data to estimate the hedonic values of lands in dispute and another dataset on judge experience, we provide evidence that the plaintiff’s claim has a strong anchoring effect on the court’s judgment. Specifically, the plaintiff’s claim, the defendant’s counter-claim, and the three-judge panel all have significant influence on the decisions of the less-experienced judges; while none of the three has any effect on the decisions of the more-experienced judges. Therefore, we not only provide evidence for anchoring in real litigations, but also identify experience as its crucial determinant.

Keywords: Anchoring effect, equivalent to rent, compensation, unlawful possession, unjust enrichment, rental yield rate, judicial yield rate, self-assessed value, hedonic estimate, land price, judge’s experience