Anchoring bias is the habit of trusting the first data received and it often manipulates critical thinking processes. To avoid decision fatigue, your brain unconsciously looks for shortcuts in reasoning processes by trusting initial data.
Let’s say your coworker tells you about their family. They start by discussing their one-year-old and you’ve already established an idea of how old they are in your head, even as they move on to discuss their 10-year-old.
If you’d been unaffected by that first information, you’d consider this new information more thoroughly and adjust your age expectation. But that first number anchored your idea of how old your coworker is.
To avoid decision fatigue, your brain unconsciously looked for shortcuts in reasoning processes by trusting initial data.
What is anchoring bias?
Anchoring bias regards making judgments or decisions based on the first piece of information received. This initial data causes you to form an opinion about the subject and leads to biased decision-making.
After that, all new interpretations of a situation relate to the anchor. For example, if you’re negotiating your salary, the first offer dictates the counteroffer. If you ask for a 10% raise, your boss may counteroffer with 7%, but if you’d asked for 15%, they may have offered 10%.
Anchors come from two sources:
- External anchors: pieces of information provided by a third party, like a product’s price or weather forecast
- Internal anchors: reference points based on personal belief or experience, like how growing up in the country might make living in a small city apartment seem objectively undesirable
Anchoring bias and social psychology
In 1974, psychologists Amos Tversky and Daniel Kahneman conducted experiments to better understand and define anchoring bias. They tested how people react to internal and external anchors, finding that anchoring is often irrational and pushes human decision-making away from logic and probability.
Here are their two main theories:
1. Anchoring and adjustment bias theory
This theory hypothesizes that when people make judgments, they unconsciously establish an initial value and build the rest of their problem-solving and decision-making from that starting point. Internal anchoring happens when individuals create their own starting point.
They tested this hypothesis by asking high school students to guess as close to the following equation’s answer as possible:
8 x 7 x 6 x 5 x 4 x 3 x 2 x 1
The median answer was 2,250.
A second group of students was given the same equation backward:
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8
The median answer was 512.
Tversky and Kahneman hypothesized that each group's final answers were disparate because the students worked out the beginning of the equation and adjusted. Students from the first group had a larger anchor, thus a higher number. (The correct answer is 40,320.)
2. Selective accessibility theory
Selective accessibility, or “priming,” is when an external source provides the anchoring bias.
Tversky and Kahneman asked participants to guess the percentage of African countries represented within the United Nations. Before they made their estimate, a wheel with different numbers was spun, and participants were asked to guess whether the percentage was higher or lower than the number.
The researchers were surprised to find that the random number anchored the participants' guesses. Those who saw a larger number made higher estimates. (The answer is 28%.)
How to detect anchoring bias
Anchoring is the most common cognitive bias in human decision-making. Knowing how to detect and combat your unconscious biases will help you make more critical, well-rounded decisions.
Here are a few ways to detect when you’re anchoring:
1. You focus on one piece of information
Most decisions aren’t black and white. If you feel stuck on one piece of information, you’re missing the nuance of the situation. Try not to place disproportionate importance on one bit of data to make better decisions.
For example, imagine you’re setting a budget for a new home. If you only consider the property’s price, you leave out many other important costs, like homeowner's insurance, property taxes, utility costs, real estate fees, repairs, and maintenance, that could end up pushing you over budget.
2. You make decisions very quickly
If you make decisions really quickly, you might be affected by anchoring bias. You also might get questions wrong often because you haven’t given yourself time to critically think through the problem. “What's heavier — a ton of feathers or bricks?” You might quickly guess feathers because it’s the lighter material, even though they both weigh a ton.
Imagine you’re apartment hunting and want a large kitchen for hosting. You narrow down the listings to two places: one kitchen is 11 x 10 sq ft, the other is 9 x 13 sq ft. The anchoring effect might push you to prefer the first kitchen because it seems like it will be bigger, as it starts with a higher number and both numbers are higher than the “9” in the second option. But the second kitchen’s larger.
3. You disregard conflicting information
Because anchoring bias makes us trust initial data, we’re more hesitant to accept new information. Instead, we seek reinforcing information to feed our confirmation bias.
Let’s say you’re a sales manager meeting with a potential client. Your lunch is set for noon, and they arrive 15 minutes late without notice. They apologize profusely, but their tardiness sours the meeting.
Later, you learn they had unexpected car trouble, and others vouch that their delay is out of character, but it's too late. You can't get past the bad first impression and make a managerial decision to pass on to the client.
How to avoid anchoring bias for better decision-making
Knowing your mind anchors your thinking is the first step to making better decisions. Here are four techniques for combatting your biases:
1. Educate yourself
The more you know about a particular subject, the less likely you’ll be swayed by incomplete or misleading information. Before making an important decision, pay attention to the details. For example, if you’re negotiating your salary, research industry standards for similarly experienced workers and consider your living expenses.
2. Poke holes in the anchor
Anchors tie you down. Combat this weight by poking holes in the anchoring information: consider how it could be wrong or insufficient to justify a decision. This will make your decision-making stronger all around.
3. Write it down
We think faster than we write, so journaling can help us slow down our thought processes and make more mindful decisions. It can also provide an outsider perspective, as we see the issue on the paper, not in our minds, which might make it easier for us to notice incomplete information.
4. Look for advice
It's easy to get tunnel vision when making decisions solo. Ask for advice from people who better understand the subject matter and can provide an objective opinion.
Examples of anchoring bias
Workplace decisions often feel more weighty than others since they affect your work performance and livelihood. Here are a couple of ways to avoid making professional decisions based on distracting anchors:
1. Be wary of your planning fallacy
The planning fallacy regards a natural bias toward optimism. It happens when you overestimate how much you can accomplish in a specific period, even when past experiences have proven otherwise.
Imagine you have a big presentation in a few days. Rather than preparing throughout the week, you put it off until the day before because you think it won't take much time — even if previously you’d delivered an under-prepared presentation.
The night before, you struggle to prep everything. But you’ve anchored your perception of the situation — how long it takes you to prepare — on your optimism bias, making you fail to learn from your mistakes and consider the relevance of past experiences.
2. Study the psychology of pricing
Consumer perception of what they are and aren't willing to spend is a nuanced equation that includes several factors, like time constraints, gender, emotion, and knowledge. But there are some psychological tricks for pricing.
For example, a 2021 study found that people perceive cost differently depending on how close prices are to round numbers. Researchers set up a coffee stand and sold medium and large coffees for $0.95 and $1.20 or $1.00 and $1.25, respectively. Even though the price difference was the same, when the first digit changed from 0 to 1, customers were 71% more likely to choose the smaller size.
Knowing how initial information and number sizes sway consumers could help you increase revenue strategically or make wiser business-spending decisions yourself.
3 interesting facts about anchoring
The more you know the better prepared you’ll be to detect and combat your biases. Here are three interesting facts about the psychology behind anchoring:
1. Anchoring bias is affected by emotion
People are more likely to shift toward biased reference points when feeling sad or angry compared to neutral or happy. Few people are exempt — even judges are susceptible to anchor bias when angry.
If you’re making an important decision in a negative emotional state, step back, try to regulate your emotions, and evaluate the decision once calm.
2. Personality plays a key role in bias
Certain personality types are more susceptible to the anchoring effect, like being agreeable or conscientious. Understanding your positive personality traits better might help you combat anchoring biases to make more well-rounded decisions.
3. Time isn't always your friend
If you’re unaware of your anchoring biases, taking more time to make decisions might not help you make better ones. Instead, your brain has more time to find information confirming your bias, leading to increasingly problematic decision-making.
Bias awareness helps as you’ll know to critically evaluate initial data and poke holes in the first conclusions.
Free your mind
Even if you can't control your mind's tendency to create biases, you don't have to be anchored down by them.
Identifying when your thought process becomes stuck on specific information is an important first step. Once you’ve habituated more initial critical thinking, consider popular beliefs you’ve never evaluated deeper.
Anchoring bias has always affected your understanding of the world — opening your mind up to alternative perceptions will lead to a more well-rounded picture of yourself and those around you.
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