Anchoring Bias
The anchoring bias (or anchoring effect) is the tendency to be disproportionately influenced by the first number or piece of information encountered when making estimates — the anchor — and to adjust insufficiently from it.
Primary source: kahneman-2011-thinking-fast-and-slow
Demonstration
In a classic experiment, participants spun a wheel (rigged to land on 10 or 65) and were asked what percentage of UN members are African nations. Participants who spun 65 gave an average estimate of 45%; those who spun 10 gave an average of 25%. The arbitrary number from a wheel influenced estimates of an unrelated fact.
In salary negotiations, whoever states the first number anchors the negotiation around it. In retail, a “was 99” price tag anchors perception of value.
Why Adjustment Is Always Insufficient
Both System 1 (associative priming) and System 2 (consciously adjusting from the anchor) contribute to anchoring. System 2 adjusts but stops too early — once a number enters the range of “plausible,” adjustment slows.
Applications
- Negotiation: make the first offer (set the anchor) when you have good information; reject or replace extreme anchors with your own
- Legal: damage amounts stated in opening arguments anchor jury awards
- Finance: a stock’s 52-week high anchors investor perceptions of “fair value”
Corrective
Generate your own estimate before hearing any anchor. If you cannot avoid seeing the anchor, consciously argue against it from first principles.
Related Concepts
- heuristics — parent category
- cognitive-biases — anchoring as one of the most robust and exploitable biases
- prospect-theory — reference points (a form of anchor) drive loss aversion