This article is about a cognitive bias that occurs in decision making. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor. For example, the initial price offered for a used car sets how to adjust contrast of pdf standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth.
People focus on notable differences, excluding those that are less conspicuous, when making predictions about happiness or convenience. For example, when people were asked how much happier they believe Californians are compared to Midwesterners, Californians and Midwesterners both said Californians must be considerably happier, when, in fact, there was no difference between the actual happiness rating of Californians and Midwesterners. A rise in income has only a small and transient effect on happiness and well-being, but people consistently overestimate this effect. These adjustments are usually insufficient, giving the initial anchor a great deal of influence over future assessments. Because participants did not have enough time to calculate the full answer, they had to make an estimate after their first few multiplications. The correct answer was 40,320.
In another study by Tversky and Kahneman, participants observed a roulette wheel that was predetermined to stop on either 10 or 65. Participants were then asked to guess the percentage of the United Nations that were African nations. The pattern has held in other experiments for a wide variety of different subjects of estimation. They were then asked to bid for these items, with the result that the audience members with higher two-digit numbers would submit bids that were between 60 percent and 120 percent higher than those with the lower social security numbers, which had become their anchor.
Various studies have shown that anchoring is very difficult to avoid. For example, in one study students were given anchors that were obviously wrong. 9, or before or after age 140. Other studies have tried to eliminate anchoring much more directly.
In a study exploring the causes and properties of anchoring, participants were exposed to an anchor and asked to guess how many physicians were listed in the local phone book. In addition, they were explicitly informed that anchoring would “contaminate” their responses, and that they should do their best to correct for that. A control group received no anchor and no explanation. Regardless of how they were informed and whether they were informed correctly, all of the experimental groups reported higher estimates than the control group. Thus, despite being expressly aware of the anchoring effect, participants were still unable to avoid it. A later study found that even when offered monetary incentives, people are unable to effectively adjust from an anchor. Several theories have been put forth to explain what causes anchoring, although some explanations are more popular than others, there is no consensus as to which is best.
In a study on possible causes of anchoring, two authors described anchoring as easy to demonstrate, but hard to explain. At least one group of researchers has argued that multiple causes are at play, and that what is called “anchoring” is actually several different effects. Other researchers also found evidence supporting the anchoring-and-adjusting explanation. However, later researchers criticized this model, because it is only applicable when the initial anchor is outside the range of acceptable answers. To use an earlier example, since Mahatma Gandhi obviously did not die at age 9, then people will adjust from there. If a reasonable number were given, though, there would be no adjustment.
Therefore, this theory cannot, according to its critics, explain the anchoring effect. Another study found that the anchoring effect holds even when the anchor is subliminal. According to Tversky and Kahneman’s theory, this is impossible, since anchoring is only the result of conscious adjustment. Because of arguments like these, anchoring-and-adjusting has fallen out of favor. Assuming it is not, the judge moves on to another guess, but not before accessing all the relevant attributes of the anchor itself. Then, when evaluating the new answer, the judge looks for ways in which it is similar to the anchor, resulting in the anchoring effect.