Anchoring

Anchoring cognitive bias refers to the human tendency to rely heavily on the first piece of information encountered (the 'anchor') when making decisions. This bias impacts judgment and decision-making processes by disproportionately influencing subsequent thoughts and choices based on the initial anchor point.

How it works

Anchoring occurs when individuals use an initial piece of information to make subsequent evaluations, often subconsciously adjusting perceptions and decisions around this 'anchor.' Even irrelevant or arbitrary anchors can significantly affect one's estimates and decisions, as the initial anchor serves as a mental shortcut in processing complex information.

Examples

• In negotiations, the first price offered can serve as an anchor, strongly influencing the final agreed-upon price.
• When estimating the height of the Eiffel Tower after being primed with a number, individuals often base their guesses around that number, even if it's unrelated.
• Real estate agents may be influenced by the listing price of a property, affecting their assessment of its market value.

Consequences

Anchoring can lead to skewed decision-making and judgment errors. It can make negotiations less flexible, impact financial decisions, and contribute to over- or underestimations of value or risk. Anchoring can distort purchasing decisions and create biases in planning and forecasting activities.

Counteracting

To counteract anchoring, individuals should consciously recognize the potential influence of anchors and deliberately consider multiple perspectives or information sources. Techniques like seeking outside opinions, employing statistical analysis, and developing critical thinking skills can also mitigate the anchoring effect.

Critiques

Some critiques of anchoring suggest that it may not always result from cognitive biases but rather from individuals using reasonable heuristics in complex situations. Additionally, the strength and impact of anchoring can vary significantly based on context, the nature of the task, and individual differences among decision-makers.

Fields of Impact

Also known as

Relevant Research

• Judgment under Uncertainty: Heuristics and Biases

  Tversky, A., & Kahneman, D. (1974)

  Science

• Putting Adjustment Back in the Anchoring and Adjustment Heuristic: Differential Processing of Self-Generated and Experimenter-Provided Anchors

  Epley, N., & Gilovich, T. (2001)

  Psychological Science

• Anchoring, Activation, and the Construction of Values

  Chapman, G. B., & Johnson, E. J. (1994)

  Organizational Behavior and Human Decision Processes