Anchoring and Adjustment Bias

Psych 🧠 - 371/500

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What is it?

Anchoring and adjustment bias is a cognitive shortcut where people rely too heavily on the first piece of information they receive (the "anchor") when making decisions or estimates.

anchors?

Once an anchor is set, individuals adjust their judgments around it but often fail to adjust enough, leading to biased outcomes.

First introduced by Tversky and Kahneman in 1974, this bias highlights how initial information can disproportionately influence our thought processes.

Examples of Anchoring and Adjustment Bias:

1. Negotiations: A high opening price in a salary negotiation anchors expectations, making counteroffers closer to the initial figure, even if it’s unreasonable.

2. Shopping Discounts: A product originally priced at $100 but marked down to $70 seems like a bargain, even if $70 is its fair market value.

3. Estimation Tasks: When asked if the Eiffel Tower is taller or shorter than 1,000 feet, people tend to estimate its height closer to 1,000 feet, regardless of the actual height.

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What do I need to know:

1. Improved Decision-Making: Recognizing this bias helps in making more rational decisions by questioning the initial anchor.

2. Enhanced Negotiation Skills: Awareness of anchoring can lead to better strategies in setting or responding to initial offers.

3. Critical Thinking: Understanding the bias encourages a deeper evaluation of information, rather than relying on surface-level cues.

Source:

• https://www.simplypsychology.org/what-is-the-anchoring-bias.html