Anchoring Bias

Over-relying on the first piece of information received

JudgmentDecision-making

What is it?

Anchoring bias, described by psychologists Amos Tversky and Daniel Kahneman in 1974, is a mental shortcut in which an initial piece of information becomes the reference point for later judgments. The anchor can be entirely arbitrary and still shift decisions. In a famous experiment, a number produced by a wheel of fortune shifted participants' estimates of the share of African countries in the United Nations. The bias largely operates outside awareness, and knowing about it does not make you immune. Negotiators, salespeople, and marketers often use anchoring deliberately when they choose opening offers or display prices. In a negotiation, whoever makes the first offer often anchors the entire discussion. Anchoring effects have been observed in salary negotiations, medical diagnoses, and even judicial sentencing, and experts are not immune. Adjustment away from an anchor tends to be insufficient, so final estimates stay pulled toward the initial value, even when that value is irrelevant.

Example

If a house is listed at $500,000, $450,000 can feel like a great deal even if it's only worth $400,000. In a salary negotiation, the first number mentioned often shapes the final figure. A jacket marked "$80, now $40" feels like a bargain because of the crossed-out price.

References

Tversky, A., & Kahneman, D. (1974). Judgment Under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124-1131.

Epley, N., & Gilovich, T. (2006). The Anchoring-and-Adjustment Heuristic: Why the Adjustments Are Insufficient. Psychological Science, 17(4), 311-318.

Furnham, A., & Boo, H. C. (2011). A Literature Review of the Anchoring Effect. The Journal of Socio-Economics, 40(1), 35-42.

How to Prevent It

Doxa uses AI and can make mistakes. How it's built

Question

What would I think if I had received different information first?

Question

Am I adjusting enough from my initial reference point?

Question

Where did this initial number or estimate come from?

Question

Is this anchor based on relevant data or arbitrary choice?

Question

What would be a completely independent estimate of this value?

Technique

Generate your own estimate before looking at provided numbers.

Technique

In a negotiation, prepare your own opening figure so the other side's number isn't your only reference.

Technique

Ask each team member to estimate independently before sharing.

Technique

Research market rates and benchmarks from multiple sources.

Technique

List reasons why the anchor might be too high or too low before you adjust from it.

Scientific Sources

Tversky, A., Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science.

Ariely, D., Loewenstein, G., Prelec, D. (2003). Coherent Arbitrariness: Stable Demand Curves without Stable Preferences. Quarterly Journal of Economics.