Anchoring in psychology is a specific cognitive bias. It takes the form of individuals grabbing hold of the one piece of information they heard first, to the detriment of other information.
You might know this as ‘first impressions’ – when someone relies on their own first idea of a person or situation.
How the psychology of anchoring works
Anchoring affects the information around it. It works in such a way that information which is close to the original information is assimilated.
Those pieces of information that are not, however, is ignored or pushed away. When this happens, any decisions are made with reference to the anchor.
Psychological anchoring influences the way we assess likelihood and probability. The anchor point is the place and information where we begin. When making decisions, people then make adjustments relative to their original anchor.
Anchoring in psychology was first explored by Amos Tversky and Daniel Kahneman.
They ran a series of experiments to determine how people would guess based on previous information.
One test involved a roulette wheel that had been preset to only stop at two numbers – ten and sixty-five. People were asked to spin the wheel and then estimate how many African countries had entered into the UN.
The two researchers found that the level of countries estimate varied with the numbers of the roulette table.
A similar study was conducted by Dan Ariely, using people’s numbers. He had people write the last two digits of their number out and then asked them if they would buy certain items for that amount of money.
The catch was that the people involved in the experiment were not told the value of the items that they were buying. Ariely found that people who had a higher two digit number made higher bids for the items at hand.
Those who had a lower number had lower bids. The psychology of anchoring made the people choose the numbers they had, even though they affected nothing.
Can you avoid anchoring?
Unfortunately, it would appear not. The psychology of anchoring inevitably affects us when we make decisions. Even studies that have gone out of their way to give people bad information (i.e. untrue anchor facts) showed this.
One particular study asked people, separately, when they thought Gandhi had died. They were given the choice of either before and after nine or before and after one hundred and forty. Both of these numbers are wrong, of course, but people still acted as though the numbers (anchors) were correct.
How anchoring biases affect your decision making
Money
Buying
Imagine, if you will, that you are in the market for a new car. Through visits to various car sites online, you can see that the average price for the car you want is nearly thirty thousand pounds. When you go to a car lot to actually buy the car, the lot is offering it for five hundred pounds less than the price you saw.
The psychology of anchoring will almost inevitably lead you to buy the car at that price due to the five hundred pound difference, even if further searching would give you a car at a still lower price.
Salary negotiations
We’ve all heard the stories about women finding it harder to negotiate salaries than men. The psychology of anchoring, unfortunately, can also affect salary negotiations negatively.
Many people will find themselves hesitating to even start the process, much less make a large demand. Recently, research has begun to show that specific actions mean that people have the best chance of successfully negotiating their own salaries.
These actions include making your own demand first, instead of allowing others to begin negotiations. When you make a demand first, it becomes your focus point.
Psychological anchoring will make sure that this first offer will become the one that you fix on as reasonable. It will form the basis of your later demands, so make it a good salary!
It influences much more than money
The psychology of anchoring affects much more than simply financial decisions. It can affect the daily lives of both ourselves and the people around us.
Dating
When do you allow your kids to date? The standards are changing all the time, but anchoring will probably make you follow the standards which were deemed appropriate when you were growing up.
This can mean that you actively prevent your children from dating until they reach the age you had to be.
Longevity
Many people calculate the age they will live to courtesy of their parents. This can have detrimental effects because it ignores other information in favour of just one idea. You might focus on the ages of your parents, without regard to their lifestyle, eating habits, and other factors.
References:
