Anchoring (cognitive bias)
Anchoring is a cognitive bias that significantly influences decision-making by causing individuals to give excessive weight to the first piece of information encountered. This initial information acts as a reference point, or "anchor," affecting how subsequent information is assessed, regardless of its relevance or importance. For example, a student may evaluate colleges based on the condition of dorms after hearing about one school with excellent facilities, overshadowing other critical factors such as academic programs or location.
This bias is prevalent in various contexts, such as negotiations, where the first offer can set expectations for the remainder of the discussion. Similarly, when making purchases, the initial price a buyer sees can impact their perception of the value of subsequent options. Anchoring can also affect personal situations, like a person recovering from a breakup who struggles to envision future happiness due to their current emotional state.
To mitigate the effects of anchoring, individuals can be mindful of this bias and seek out additional information to inform their decisions more comprehensively. Engaging in thorough research and comparing multiple factors can help counteract the tendency to rely solely on the initial information received.
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Anchoring (cognitive bias)
Anchoring is a cognitive bias, or an error in reasoning that affects the decision-making process. Specifically, anchoring refers to giving too much emphasis to the first piece of information one gathers while making a decision. This piece of information becomes the standard by which all other information related to the decision is measured, even if it is not the most important information. For instance, someone who is choosing a college may learn that one school under consideration has brand new dorms with great amenities and then compare all other schools based on the condition of their dorms. Anchoring is an important tool in negotiating. Experts say its effects on decision-making are something to keep in mind when making choices in everyday life.
Background
Although human beings have complex brains capable of handling very difficult concepts and thoughts, researchers have found that people frequently take mental shortcuts when making decisions. These shortcuts are the result of cognitive biases, or irrational patterns of thinking that consistently are applied in decision-making processes. Dozens of cognitive biases exist, and all can impede the rationality of a decision.
Cognitive biases are thought to be the result of the brain's attempts to make sense of information it receives during the process of making a decision. Even the simplest decisions, such as where to eat lunch, involve many factors. The brain attempts to organize all of these factors in a hierarchy. Often, it starts with the first fact it receives. This helps to limit the number of variables the brain has to sort through in making the decision. So, if one friend asks another where they should have lunch before they go to the movies, the decision maker may think only of places that are close to the movie theater, even if there is no real reason why they could not eat elsewhere.
Overview
Anchoring is a very common cognitive bias. One theory for why it happens is that it is human nature to look for affirmation when making a decision. When considering factors in making a decision, the mind automatically looks for ways to make comparisons. The brain starts with the first piece of information it has received and looks for other pieces of information that confirm that the first piece of information is the best factor. Another element in anchoring is the brain's tendency to look for guides, markers, and reference points while attempting to navigate the way to a decision. Just as someone who is trying to travel from one location to another will use the starting point as a reference in determining progress on the journey, the brain tends to use the first bit of information it has gathered related to a decision as a guide to what progress is being made in the decision process.
For example, if someone is shopping for a coat and the first coat they try on is $20, the person is very likely to compare the rest of the coats they try on to that price. Even if that price turns out to be unrealistically low because the coat is of inferior quality, the anchoring bias could cause the person to consider every other coat very expensive. The price of the other coats may be very reasonable, but the anchoring bias will affect the person's perception of the prices and the coats. The bias works in the other direction as well. A person who is told that the car they are considering normally sells for $25,000 is likely to consider any discount below that in a favorable light, even if the car is still overpriced or another car has better features.
Anchoring bias has a significant impact in any transaction that involves negotiation, from making a major purchase, such as a car or a house, to asking a boss for a raise. As noted, a person who pays less than the sticker price for a car will generally think the price is a good deal. On the other hand, a boss whose employee asks for a $2.00 per hour raise is likely to subconsciously see a raise negotiated down to $1.00 per hour as a deal, even if they were originally considering offering a raise of only $0.50 per hour. Some studies have shown that the higher the initial point is set in negotiations, the higher the ending point will be, simply because the initial point serves as the anchor for the decision. For this reason, many experts recommend making the first offer in any negotiation and setting the bar high to ensure the most favorable outcome.
The anchoring bias affects other aspects of life as well. For example, a physician who learns that a patient fell and has been experiencing confusion may initially be so focused on the first fact—that the patient fell—that they are slow to suspect that a new medication caused both the fall and the confusion. Anchoring is also why people who have broken up with a romantic partner might think they will never fall in love or be happy again. The brain tends to anchor itself to the feelings the person is having at the moment, making it difficult to believe that the emotions will ever be any different. This can happen even when a more rational thought process would confirm that most people can recover from these experiences and find love and happiness.
Avoiding the anchoring bias is possible. Experts say one of the single best ways is to be aware of the bias and make a conscious effort to recognize its impact. Doing additional research also can help. For example, when car shopping, looking at other car models and comparing prices between them or looking at other factors, such as how reliable other owners have found certain cars to be, can help increase the chances of making a rational decision.
Bibliography
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