What Is Anchoring Bias? | Definition & Examples
Anchoring bias describes people’s tendency to rely too heavily on the first piece of information they receive on a topic. Regardless of the accuracy of that information, people use it as a reference point, or anchor, to make subsequent judgments. Because of this, anchoring bias can lead to poor decisions in various contexts, such as salary negotiations, medical diagnoses, and purchases.
What is anchoring bias?
Anchoring bias (also known as anchoring heuristic or anchoring effect) is a type of cognitive bias that causes people to favor information they received early in the decision-making process. People hold on to this information, called an anchor, as a reference point and fail to correctly adjust their initial impressions, even after receiving additional information.
Once the anchor is set, subsequent judgments are made by adjusting away from that anchor, while staying within the range set by it. For example, the initial price offered for a used car sets the standard for the rest of the negotiation. Here, prices lower than the initial price seem like a good deal, even if they are still higher than the car’s actual value. As a result, our perception of reality is distorted, and our decisions are biased.
Depending on their sources, anchors can be external or internal.
- External anchors are reference points provided by others (for example, the suggested retail price tags we see on many products).
- Internal anchors are reference points based on beliefs, experiences, or contextual clues. For example, if your parents followed an active lifestyle and exercised a lot, this experience might set a standard level of exercise for you in adulthood.
Why does anchoring bias happen?
Although there is no consensus as to why anchoring bias happens, two mechanisms can help explain this phenomenon:
- Anchoring and adjustment applies best to situations where people are influenced by an internal anchor.
- Confirmatory hypothesis testing can explain how external anchors influence our judgment.
Anchoring and adjustment
Anchoring and adjustment is the mechanism that explains how people try to answer a general knowledge question when they don’t know the answer.
- If people don’t know the correct answer, they try to make an educated guess and adjust from there until they reach a conclusion that seems plausible.
- This initial estimation becomes an internal anchor and influences subsequent adjustments.
- Because the adjustment is usually insufficient, it results in a biased estimation. In other words, people always end up with an answer that is close to the anchor anyway.
Confirmatory hypothesis testing
When we are presented with an external anchor, our first response is to consider the anchor as a possible answer. While we are doing that, we activate existing information in our brain that is consistent with the anchor.
- This information is more accessible, and so we use it for estimating the absolute value, a phenomenon called selective accessibility.
- In general, after a comparison with a high anchor, people are likely to base their absolute estimate on knowledge indicating that the target object or situation value is fairly high.
- However, after a comparison with a low anchor, people are likely to base their absolute estimate on knowledge suggesting that the value is fairly low.
Anchoring bias examples
Salary negotiations are particularly susceptible to anchoring bias. The person who opens the negotiations and sets the anchor has an advantage.
Anchors that are entirely arbitrary and unrelated to the decision can still influence our judgment, especially when we lack the knowledge to make an educated guess.
Other types of cognitive bias in decision-making
Apart from anchoring bias, there are two more types of heuristics that people use that can affect their decision-making:
- The availability heuristic occurs when we place greater emphasis on information that is easier to recall while forming a judgment.
- The representativeness heuristic arises when we estimate the probability of something based on the degree to which it is similar to (or is representative of) a known situation.
Although all of them help us reduce the time and effort needed to form a judgment, they do so in different ways.
Other types of research bias
Frequently asked questions
- What is the difference between anchoring bias and availability bias?
Although anchoring bias and availability bias are both types of cognitive bias (or heuristics) and may seem similar, they are quite different:
- The availability bias refers to people’s tendency to estimate the probability of an outcome (e.g., being struck by lightning), based on how easily they can recall similar events. Because of this, people sometimes mix up ease of recall with probability or frequency and end up believing that some events are far more common than they actually are.
- Anchoring bias refers to people’s tendency to give disproportionate weight to the first piece of information they receive in a decision-making context. As a result, this becomes a reference point or anchor that influences people’s perception of subsequent information.
In other words, although both anchoring and availability bias influence our perception, anchoring is related to the order in which we receive the information, while availability is related to ease of recall.
- When does anchoring bias occur?
Anchoring bias occurs when you focus on the first piece of information you receive during a decision-making process and fail to consider any other information that follows.
- What is anchoring and adjustment bias?
Anchoring and adjustment bias refers to the mechanism underlying cases in which we are influenced by an internal anchor or reference point. When we are faced with a decision or question and we are uncertain about the right option, we try to make an educated guess.
For example, when we are trying to estimate how long it will take us to write a paper. In this case, we start with an initial anchor value that seems reasonable and then adjust until an acceptable answer is found. Because we subconsciously place more importance on the initial value or answer we come up with, we typically fail to adjust sufficiently from there on and our judgment is biased.
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