Anchoring Bias—Where the Initial Information Creates Confusion in Decision Making
Anchoring bias in human phycology is quite interesting. In this article, we are going to discuss anchoring bias on the Kahneman and Tversky research view.
When we go to make a decision on a subject, we usually rely heavily on the first piece of information we already know about that subject. Let me give you an example. You decide to buy a piece of furniture for the house. You see on the internet, the average price of that furniture is 30,000.
He went to the shop and saw that the price of the furniture was 26,000. Seeing the low price of one thousand rupees, you quickly decided to buy it. However, another store was selling the same furniture at 24,000.
Such incidents always happen to us in different cases. The question is, why did you take the offer of the first store?
Looking at the data on the internet you decided to spend 26,000. So, the offer of fewer than one thousand rupees seemed quite profitable. Other stores may have lower prices, a possibility you didn't consider because the 30,000 price information was stuck in your mind. It has served as your bargaining chip. This is why the mistake you make is called 'anchoring bias'. And the value that has served as your center is called the 'anchoring point'.
Anchoring bias is one of the strongest misconceptions in psychology. Numerous studies have confirmed the existence of this effect. These studies also show that there is a possibility that something will act as an anchoring point, which has nothing to do with what we are deciding. The famous psychologists Kahneman and Tversky conducted such an experiment.
Those who took part in the experiment rotated a disc and selected an arbitrary number from zero to one hundred. They were then asked how many countries on the African continent had joined the United Nations. That number told them to turn the wheel.
Those who first selected the larger number answered the question larger than the actual number. Those who chose smaller numbers also answered smaller numbers. That is, the number of participants initially selected served as their anchoring point.
This delusion is found everywhere in human behavior. For this reason, its core is thought to be deeply rooted in the human brain. The real cause is still debated among scientists.
However, some recent evidence suggests that the reasons for this vary depending on the differences in the source of the anchoring point. We can make all kinds of information, even values, and the anchoring point. These anchoring points may be our own ideas, but others may also play a role here.
The first anchoring bias came in 1958 in a study by Muzaffar Sheriff, Daniel Taub, and Carl Howland. Their experiments showed that a very heavy object creates a misleading idea about the mass of other objects. However, Ames Tversky and Daniel Kahneman first identified the issue as an error in the decision-making process.
When it comes to behavioral psychology, the names of these two people come first. In 1974, they published a paper, Judgment under Uncertainty: Heuristics and Biases.
There they explain that when people go to guess about something, they need a starting point. From there they coordinate on that later. However, most people do not make this adjustment properly.
They don’t want to go too far from the plan or number that they took for granted in the beginning. That's why he made the wrong decision. This explanation is called the ‘anchor-and-adjust’ hypothesis.
Anchoring Bias Examples
Kahneman and Tversky conducted an experiment in which participants were asked to estimate the value of this quality within five seconds:
8 x 7 x 6 x 5 x 4 x 3 x 2 x 1 =?
Another group was asked to make the same assumption. But there was a reverse order of numbers.
1 x 2 x 3 x 4 x 5 x 6 x 7 x 8 =?
The result of the first group was 2250. On the other hand, the middle of the second group was 512. Here, the correct answer is 40,320. Kahneman and Tversky explained why there was such a big difference between the two groups. They don’t know How to avoid anchoring bias.
Participants had some of this quality in their heads. Then from there, he tried to guess the answer to the whole quality. In the case of the first group, the first numbers were larger.
As a result, the answer to their partial quality also grew. This answer served as their anchoring point. As the first numbers in the second group became smaller, so did their anchoring points. So, they also answered small numbers.
When anchoring points are determined from an external source, however, this anchor-and-adjust hypothesis cannot be well explained. In that case, Kahneman and Tversky gave another hypothesis, entitled ‘Selective Accessibility’.
Selective accessibility depends on one more effect, which is called priming. When a person is given an idea about something, that idea is subconsciously activated in some part of the brain.
This helps the idea to be straightforward. Priming is a ubiquitous phenomenon. It is also responsible for many biases, one of which is the anchoring bias.
When we are given information that acts as an anchoring point, we mentally verify the reliability of that information. The horse of our imagination then starts running.
For example, if someone were asked if the length of the Mississippi River was more or less three thousand miles, he would try to imagine the north-south extent of the United States. Because the Mississippi River has extended to the north-south of the United States.
In order to create such a model in imagination, we activate other information consistent with this information. Thus, all information is subject to the prime effect and it plays a role in our decision making. This information, activated as a result of the prime effect, will not work for any other concept.
For example, the anchor point (three thousand miles) given for the length of the Mississippi River will not affect the width of the river. The number three thousand miles will only work for length.
Some more influencers have come up in the study as the cause of anchoring bias. Being one of them, the mood. Evidence suggests that people are more likely to fall into the trap of anchoring bias when they are in a bad mood than when they are in a good mood.
This result was unimaginable. Because, as is commonly seen in various experiments, people are more prone to delusions if they are in a good mood. Because, in a depressed state, people think more about everything. Plus, there is some use in Anchoring bias in politics also.
The anchoring effect has so much effect on our daily lives that we can't even catch it unless we think about it well. For example: If your parents live for many years, there is a very good chance that you have subconsciously assumed that your life expectancy will be much longer.
Again, if you play a lot of sports as a child, your child will find it normal to play sports for a long time. Even the ‘first impression’ that a patient’s symptoms make in a doctor’s mind can act as an anchor point. In this case, the doctor may make a mistake in diagnosing the disease.
In criminal cases
In criminal cases, lawyers and prosecutors in many places demand a fixed term of imprisonment for the offender. Although the judge has complete freedom of choice, the study found that lawyers' demands serve as an anchor point in his mind. Thus these claims have an impact on the judiciary.
The anchoring bias is so deeply ingrained in us that there is no way to get rid of it completely. However, some research has been done to solve this. In one such study, car experts were asked if the price at which a particular car was resold (anchor price) was more or less the same.
They were then asked to state a price for themselves. Here, half of the experts were asked to think if there was an argument against the anchor price. Very few anchoring effects were observed among those who were asked to argue against the anchor point.
Finding the cause against the anchor point can therefore be a good strategy. It’s a lot like red teaming, where only a few people are hired to challenge the decision of the whole group.
Finding only the weaknesses of the plan at the time of decision making can thus make the decision much stronger. When thinking about anything, we have to look at the whole information, think about all the possible options. And be careful about anchor points.