Anchoring Bias
Type: Decision — Adjustment Also Known As: Focalism, anchoring heuristic
Definition
Relying too heavily on the first piece of information offered (the “anchor”) when making decisions. Once an anchor is set, all subsequent judgments are made by adjusting relative to that anchor, insufficiently adjusting away from it.
“The house was listed at 750,000 seems like a good deal.”
Form
- Initial information (anchor) is received
- Adjustments are made from that anchor
- Adjustments are typically insufficient
- Final judgment remains closer to anchor than warranted
Examples
Example 1: Salary Negotiation
A job candidate asks for 110,000 and feels satisfied. The position was budgeted at $130,000.
Problem: The candidate’s high opening anchored the negotiation low, even though the budget allowed more.
Example 2: Medical Decisions
A patient diagnosed with a 6-month prognosis focuses on that number. Even with new treatments, they emotionally prepare for 6 months rather than adjusting to new information.
Problem: The initial prognosis anchored expectations, affecting quality of life decisions.
Example 3: Legal Judgments
A plaintiff asks for 5 million, feeling it’s conservative. Without the anchor, they might have awarded $1 million.
Problem: The extreme anchor shifted the entire judgment scale upward.
Example 4: Purchase Decisions
“Was 250!” The original price anchors perceived value. The 100.
Problem: The fictional original price created artificial value.
Why It Happens
- Cognitive conservatism — we prefer minimal adjustment
- Confirmation bias reinforces the anchor
- Mental effort of full reassessment is high
- Anchors feel like “starting points” that must be respected
- Uncertainty makes any number feel better than no number
How to Counter
- Awareness: Recognize when an anchor is being set
- Extreme adjustment: Deliberately consider numbers far from the anchor
- Multiple anchors: Seek independent estimates before hearing any numbers
- Focus on merit: Evaluate based on intrinsic value, not relative to anchor
- Sleep on it: Time reduces anchoring effects
Related Concepts
- Confirmation Bias — Anchors are defended through selective attention
- Status Quo Bias — The anchor becomes the reference point
- Loss Aversion — Moving from anchor feels like loss
- Availability Heuristic — The anchor is most available information
References
- Tversky, A. & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases
- Ariely, D. (2008). Predictably Irrational
- Furnham, A. & Boo, H.C. (2011). A literature review of the anchoring effect
Part of the Convergence Protocol — Clear thinking for complex times.