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Human decision making process is influenced by many external as well as internal factors. Our behaviour cannot be deemed as fully rational. This thesis investigates the effect of emotional anchoring on a propensity to enter an asset bubble. This effect was observed in an experiment ran on an online crowdsourcing platform, Amazon Mechanical Turk. The negative anchor proves to have a significant negative effect, i.e. when a subject is under the negative anchor she is more prone to enter the bubble. The positive anchor does not have any significant effect. This thesis contributes to the general knowledge by confirming that trading decisions we make are subjected to the emotions we feel prior to making the decisions. JEL Classification C72, C91, D03, D53 Keywords Bubble game, anchoring, emotions Author's e-mail david.pospisil89@gmail.com Supervisor's e-mail vaclav.korbel@fsv.cuni.cz

Numeric estimates are influenced by a variety of factors including a person's knowledge and the presence of numeric anchors. In general, greater knowledge leads to more accurate estimates and the presence of anchors decreases accuracy. This dissertation is focused on the relationship between these two factors. At an intuitive level, it seems that increased knowledge should lead to a decrease in anchoring effects. Unfortunately, the research on knowledge and anchoring is quite mixed. This dissertation describes four studies--the first three were experimental and the last was correlational--that addressed two primary questions: 1) Does knowledge level moderate anchoring effects such that greater knowledge in a domain is associated with smaller anchoring effects? 2) Does this relationship depend on the type of knowledge one has? Studies 1 and 2 provided an answer to the first question. In Study 1, participants who studied a list of country populations--i.e., high knowledge participants--were less influenced by anchors than participants who learned irrelevant information. In Study 2, those participants who studied a list of new car prices were less influenced by anchors than participants who learned irrelevant information. In Study 3, participants learned information designed to influence different types of knowledge. The results of Study 3 supported the prediction that only those participants in conditions that increased metric knowledge--and not mapping knowledge--would exhibit reduced anchoring effects. Finally, in Study 4, participants' knowledge was measured and compared to their anchoring effects. Contrary to expectations, none of the knowledge measures were related to the participants' anchoring effects. Theoretical and practical implications, as well as reasons why the last study was not consistent with the first three, are discussed. Taken together, these studies indicate that both the amount and type of knowledge one has are important in determining one's susceptibility to anchoring effects.

<p>Stock recommendations,frequently produced under time pressure, are susceptible to being the result of automatic and intuitive thinking. This is associated with using heuristics in decision-making which is studied by an entire school of research – the heuristics and bias approach. Heuristics of representativeness, availability and anchoring including associated biases as defined by Tversky and Kahneman provide the theoretical framework for the study. This study is aimed at extending the understanding of biases in general and cognitive biases with regard to stock recommendations. A total of thirty equity recommendations were analyzed. A t-test showed that more biases were present in the incorrect recommendations. Overconfidence, illusion of validity and anchoring were among the most frequently observed. The vast majority of recommendations were characterized by insensitivity to predictability indicating that forecasters are seemingly unaware of the difficulty of accurately predicting where the stock price is going to be within the next three to six months.</p>

Stock recommendations,frequently produced under time pressure, are susceptible to being the result of automatic and intuitive thinking. This is associated with using heuristics in decision-making which is studied by an entire school of research – the heuristics and bias approach. Heuristics of representativeness, availability and anchoring including associated biases as defined by Tversky and Kahneman provide the theoretical framework for the study. This study is aimed at extending the understanding of biases in general and cognitive biases with regard to stock recommendations. A total of thirty equity recommendations were analyzed. A t-test showed that more biases were present in the incorrect recommendations. Overconfidence, illusion of validity and anchoring were among the most frequently observed. The vast majority of recommendations were characterized by insensitivity to predictability indicating that forecasters are seemingly unaware of the difficulty of accurately predicting where the stock price is going to be within the next three to six months.

Current explanations for anchoring phenomena seem to be unable to account for the diversity of effects found by 40 years of research. Additionally, the theories do not have much to say about the processes that make anchors so resilient to modification. I argue that by focusing on the mechanisms involved in spatial representation, we can account for most anchoring effects which have spatial components.