What is anchoring bias?

Short Answer

Anchoring bias is our tendency to rely too heavily on the first piece of information we receive when making decisions, even when that information is irrelevant or misleading.

Detailed Explanation

Background

Anchoring bias affects our decisions every day, from shopping to salary negotiations to medical diagnoses. When we encounter a number or piece of information first, it becomes an "anchor" that influences all our subsequent judgments, even if that anchor has nothing to do with what we're deciding. Understanding How do cognitive biases affect decision making? reveals how anchoring bias fits into the broader picture of biased thinking.

This bias was first studied by psychologists Amos Tversky and Daniel Kahneman, who found that people's estimates are heavily influenced by initial values, regardless of whether those values are relevant. Understanding anchoring bias helps us make more rational decisions and avoid being manipulated by irrelevant information. Like other biases such as What is confirmation bias?, anchoring bias operates unconsciously and affects our judgment.

Scientific Explanation

Anchoring bias works through several psychological mechanisms:

1. Initial information processing: Our brains use the first piece of information as a reference point, making it easier to process subsequent information relative to that anchor.

2. Adjustment insufficiency: When we try to adjust away from an anchor, we typically don't adjust enough. We stay too close to the initial value, even when we know it's wrong.

3. Selective accessibility: The anchor makes certain information more accessible in our memory, leading us to focus on information that supports the anchor rather than information that contradicts it.

4. Confirmation seeking: Once anchored, we tend to look for information that confirms the anchor's relevance, rather than questioning whether the anchor should influence our decision at all.

Real Examples

• A car salesperson shows you a car priced at $30,000 first, making a $25,000 car seem like a great deal, even if similar cars elsewhere cost $20,000.

• In a salary negotiation, if an employer mentions $50,000 first, you're likely to negotiate around that number rather than researching what the position is actually worth.

• A doctor who sees a patient's high blood pressure reading first might anchor on that and miss other important symptoms.

• When shopping online, seeing a "was $100, now $50" price makes the $50 price seem like a bargain, even if the item was never actually sold at $100.

• A real estate agent showing you an expensive house first makes subsequent houses seem more affordable, even if they're still overpriced.

Practical Application

How to Apply

To reduce anchoring bias in your decisions:

1. Research independently: Before making important decisions, gather information from multiple sources without being influenced by initial values.

2. Consider the anchor's relevance: Ask yourself whether the first piece of information you received is actually relevant to your decision.

3. Set your own range: Before encountering anchors, determine what you think is reasonable based on your own research and values.

4. Take time to think: Don't make decisions immediately after receiving an anchor. Give yourself time to process and consider alternatives.

5. Seek diverse perspectives: Consult with others who haven't been exposed to the same anchor to get unbiased opinions.

How to Understand Others

When someone seems stuck on an initial number or idea:

• They may not realize they're being influenced by an anchor, as this bias operates unconsciously.

• Presenting alternative perspectives and data can help them see beyond the anchor.

• Asking questions that encourage them to think about the anchor's relevance can be more effective than directly challenging their position.

• Understanding that anchoring is a natural cognitive process helps you be more patient when helping others make better decisions.