27 lines
6.0 KiB
Markdown
27 lines
6.0 KiB
Markdown
---
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title: "Anchoring effect"
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chunk: 1/6
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source: "https://en.wikipedia.org/wiki/Anchoring_effect"
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category: "reference"
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tags: "science, encyclopedia"
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date_saved: "2026-05-05T09:57:19.378582+00:00"
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instance: "kb-cron"
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---
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The anchoring effect is a psychological phenomenon in which an individual's judgments or decisions are influenced by a reference point or "anchor" which can be completely irrelevant.
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The original description of the anchoring effect came from psychophysics. When judging stimuli along a continuum, it was noticed that the first and last stimuli were used to compare the other stimuli (this is also referred to as "end anchoring"). This concept was notably formalized in behavioral economics by Amos Tversky and Daniel Kahneman. In their seminal 1974 work, they described anchoring as a heuristic used to make estimates under uncertainty.
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Both numeric and non-numeric anchoring have been reported through research. In numeric anchoring, once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor. For example, an individual may be more likely to purchase a car if it is placed alongside a more expensive model (the anchor). Non-numeric anchoring has been observed in physical judgments involving length, weight, and volume.
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== Experimental findings ==
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The anchoring and adjustment heuristic was first theorized by Amos Tversky and Daniel Kahneman. In one of their first studies, participants were separated into one of two conditions, and either asked to compute, within 5 seconds, the product of the numbers one through to eight, either as 1 × 2 × 3 × 4 × 5 × 6 × 7 × 8 or reversed as 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1. Because participants did not have enough time to calculate the full answer, they had to make an estimate after their first few multiplications. When these first multiplications gave a small answer – because the sequence started with small numbers – the median estimate was 512; when the sequence started with the larger numbers, the median estimate was 2,250. (The correct answer is 40,320.) In another study by Tversky and Kahneman, participants were asked to estimate the percentage of African countries in the United Nations. Before estimating, the participants first observed a roulette wheel that was predetermined to stop on either 10 or 65. Participants whose wheel stopped on 10 guessed lower values (25% on average) than participants whose wheel stopped at 65 (45% on average). The pattern has held in other experiments for a wide variety of different subjects of estimation.
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As a second example, in a study by Dan Ariely, an audience is first asked to write the last two digits of their social security number and consider whether they would pay this number of dollars for items whose value they did not know, such as wine, chocolate and computer equipment. They were then asked to bid for these items, with the result that the audience members with higher two-digit numbers would submit bids that were between 60 percent and 120 percent higher than those with the lower social security numbers, which had become their anchor. When asked if they believed the number was informative of the value of the item, quite a few said yes. Trying to avoid this confusion, a small number of studies used procedures that were clearly random, such as Excel random generator button and die roll, and failed to replicate anchoring effects.
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The anchoring effect has also been documented in real estate markets. In one study in the Journal of Real Estate Research, it was established that the 2-year and 9-year highs on the Case-Shiller House Price Index could be used as anchors in predicting current house prices. The findings were used to indicate that, in forecasting house prices, these 2-year and 9-years highs might be relevant.
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In behavioral finance, anchoring has been observed in stock-purchase decisions. A study found that when using an app-based stock brokerage, an investor's first stock purchase price serves as an anchor for future stock purchases. The findings indicate that when investors start by making only a small stock purchase, they end up with less accumulated investments in the long run.
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== Characteristics ==
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=== Difficulty of avoiding ===
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Various studies have shown that anchoring is very difficult to avoid. For example, in one study students were given anchors that were wrong. They were asked whether Mahatma Gandhi died before or after age 9, or before or after age 140. Clearly neither of these anchors can be correct, but when the two groups were asked to suggest when they thought he had died, they guessed significantly differently (average age of 50 vs. average age of 67).
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Other studies have tried to eliminate anchoring much more directly. In a study exploring the causes and properties of anchoring, participants were exposed to an anchor and asked to guess how many physicians were listed in the local phone book. In addition, they were explicitly informed that anchoring would "contaminate" their responses, and that they should do their best to correct for that. A control group received no anchor and no explanation. Regardless of how they were informed and whether they were informed correctly, all of the experimental groups reported higher estimates than the control group. Thus, despite being expressly aware of the anchoring effect, most participants were still unable to avoid it. A later study found that even when offered monetary incentives, most people are unable to effectively adjust from an anchor.
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Although it has been found through many research and experiments that attempt to mitigate the decision heuristic of anchoring bias is either marginally significant or not successful at all, it can be found that the consider-the-opposite (COS strategy) has been the most reliable in mitigating the anchoring bias. In short, the COS strategy is proposed to an individual by asking them to consider the possibilities the opposite of their perceptions and beliefs. Therefore, depriving the individual of their preexisting attitudes and limiting the decision bias. |