Anchoring Bias

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What is Anchoring Bias.

Anchoring Bias is the human tendency to rely too heavily on information, especially the first piece of information that is available (treated as an "anchor"), when making subsequent judgments and decisions. It is also called Focalism.

During decision making. individuals anchor and overly rely on specific information or a specific value and then adjust to that value to account for other elements of the circumstance. Usually once the anchor is set, there is a bias toward that value.

Origin of the Anchoring Effect. History

Anchoring was pioneered by psychologists Amos Tversky and Daniel Kahneman. In their seminal work on judgment and decision-making in the 1970s they described how they conducted a number of experiments to show how people's judgments could be influenced by irrelevant information. In a classic study, participants were asked to estimate the percentage of African countries in the United Nations. Prior to making their estimates, they were asked to spin a sort of "wheel of fortune" rigged to land at 10 or 65. The participants who landed close to 10 gave significantly lower estimates, while those who landed close to 65 gave higher estimates. The random number of the wheel thus served as an anchor and influenced the later judgments of the participants.

Anchoring in Psychology

In psychology, anchoring and adjustment is seen as a psychological heuristic that influences how people intuitively assess probabilities. According to this heuristic, people start with an implicitly suggested reference point (the "anchor") and make adjustments to it to reach their estimate. A person begins with a first approximation (anchor) and then makes incremental adjustments based on additional information. These adjustments are usually insufficient, giving the initial anchor a great deal of influence over future assessments.

Relevance of Anchoring Effect in Business

This form of Cognitive Bias is particularly relevant for strategists, management consultants, negotiators, marketers, and decision makers in general.

Compare with: Agenda Setting Theory  |  Confirmation Bias  |  Status Quo Bias

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Expert Tips Advanced insights about Anchoring Bias. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Generating New and Useful Ideas in Innovation: Avoiding the Primal Mark Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Avoiding Anchoring In today's dynamic environment, to stay competitive continuous innovations and new ideas are important. For a creative i... How to Avoid Being Misguided by Experience-based Biases Analogical Strategic Reasoning, Decision-making, Cognitive Bias, Bandwagon Effect, Confirmation Bias, Anchoring We often make decisions based on past experiences and judge the future. However, our past experience can sometimes misgu... Do Sad or Happy People Make Better Decisions? Decision Making, Negotiating There is a common thought that being in a sad mood will result in a low degree of judgmental biases. For many judgmental... Three Types of Anchoring Bias Decision Making, Negotiating When talking about anchoring bias, three different types can be distinguished. These are outlined below: 1. Classic Typ...

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