Have you heard the saying, “The first impression is the last impression”? In psychology, anchoring bias is a similar concept. When we hear, read or see something for the first time, we subconsciously anchor or latch on to a perception about it.
Here’s an example:
If you find out something that negates your perception of your favorite author or sportsperson, your first reaction would likely be to reject it.
We form biases every day based on our past experiences, our upbringing, our social circle, what we learn in school, where we work and who we work with. Each interaction influences our perception of things, situations and people.
When it comes to curbing biases, the biggest challenge is identifying the difference between opinions and facts. Here, we’ll discuss the meaning ofanchoring biasand some ways to tackle theanchoring effectso that you can evaluate situations more objectively.
What Is An Anchoring Bias?
Psychologists Amos Tversky and Daniel Kahneman first formalizedanchoring psychologyas a cognitive bias that affects the way we intuitively understand information. We rely on the information we access above everything else. For instance, if someone tells you that they topped their board examinations, you may believe that they are very intelligent–even though this may not be true.
Let’s look at some examples of anchoring bias:
Say that you go to the store to buy a pair of trousers. You spot two pairs of trousers. One is very expensive and the other is cheaper. You’re likely to think the second one is more affordable when, in fact, it may be costlier than many other options. Think about seasonal sales. We naturally believe that something is worth buying if it’s marked down from its original cost.
When we meet someone new, we often form an opinion about them based on what they’re wearing and the way they talk. Preconceived ideas and opinions often act as a roadblock in decision-making because they affect the way we perceive a person. If you believe that your team is incapable of coming up with fresh ideas, you’ll dismiss their suggestions without considering their potential.
Anchoring biasis based on preexisting information and can influence all subsequent decisions.
How Does Anchoring Psychology Impact Your Life?
Whether you’re going to watch a movie, interacting with your colleagues or buying a new bag, every decision you make is based on existing ideas. This is particularly relevant in a professional setting becauseanchoring biasplays a critical role in decision-making.
A common workplace situation impacted byanchoring biasis the hiring process. Say that your organization evaluates candidates based on their international education. In such a case, you might miss out on a star candidate because they studied at a local university. It’s important to approach your hiring criteria objectively to ensure you have a diverse workforce.
You’ll also observe theanchoring effectduring salary negotiations. If you really want a job and the talent acquisition manager quotes a figure right in the beginning, you’ll likely go with that number, even if it’s lower than you anticipated. This is because the original figure is now the anchor in your mind. Unknowingly, you latched on to the first piece of information you got, ignoring everything else.
There are situations where theanchoring basismay also prove to be beneficial. This is when you have to make decisions with limited information within a short time frame. In such cases, people who struggle with decision-making find it easier to go with the most probable option. For example, if you have to propose a budget for a new project, you could review the cost of similar projects and propose a number based on them.
Make Informed Decisions
Anchoring psychologycan stall our personal and professional growth. It limits our knowledge and beliefs. Being open-minded and accepting different perspectives is important to avoid theanchoring effect.
Harappa Education’s Reasoning Logically course will teach you how to evaluate a given set of information to make informed decisions. Designed for workplace impact, this course shows you how to look at a situation objectively, solve problems with a clear head and gather information from diverse sources. Don’t let your anchoring bias make decisions for you. Instead, focus on what you don’t know and welcome different opinions to become an effective decision-maker!
Explore topics & skills such as the Cognitive Skills, Black and White Thinking, Cognitive Bias & Theories of Intelligence from our Harappa Diaries blog section.
FAQs
Anchoring bias affects our daily decisions, including purchase decisions and the important decisions we make at work. An anchor can be basically anything – our perception of price can be anchored by a number (even a random one), and we can use our previous decisions as a reference point for our subsequent choices.
What is an example of anchoring bias in everyday life? ›
What is Anchoring Bias? Anchoring bias occurs when people rely too much on pre-existing information or the first information they find when making decisions. For example, if you first see a T-shirt that costs $1,200 – then see a second one that costs $100 – you're prone to see the second shirt as cheap.
How does anchoring bias affect people? ›
Anchoring bias describes people's tendency to rely too heavily on the first piece of information they receive on a topic. Regardless of the accuracy of that information, people use it as a reference point, or anchor, to make subsequent judgments.
How to use anchoring bias to your advantage? ›
When shown what a product or service costs before the promotion alongside the sale price, the initial price acts as an anchor. Clients that look at both prices will consider the new, cheaper price a better deal than they would have if only the sale price were visible.
What is the anchoring effect in students? ›
Another type of cognitive bias is focalism, otherwise known as the "anchor effect". It means we tend to place too much weight on the first piece of evidence we come across (the anchor) when making decisions.
How does anchoring affect everyday life? ›
Anchoring bias is our tendency to rely on the first piece of information we encounter. Such information serves as an anchor, and we adjust our next decisions around that reference point. Anchoring bias affects our daily decisions, including purchase decisions and the important decisions we make at work.
What are real life examples of impact bias? ›
Examples of impact bias
Failure has much less impact than everyone expects. For example, gaining or loosing a romantic partner, getting or not getting a promotion, passing or not passing a college test and so on, have much less impact, intensity and much less duration, than people expects them to have.
How does anchoring affect spending decisions? ›
By serving as an anchor, these default amounts influence the limits people will set for themselves. They adjust each limit up or down from its default amount, rather than setting a more accurate limit to reflect their real spending habits.
What is anchoring bias in psychology today? ›
Anchoring bias happens when we make judgments or decisions based on the first information we find. This bias can manifest in relationships when we form initial impressions of someone based on limited data or a single encounter.
How does anchoring bias impact negotiations? ›
A well-known cognitive bias in negotiation and in other contexts, the anchoring bias describes the common tendency to give too much weight to the first number put forth in a discussion and then inadequately adjust from that starting point, or the “anchor.” We even fixate on anchors when we know they are irrelevant to ...
How do you prevent anchoring bias?
- Identify the anchor.
- Seek alternative perspectives. Be the first to add your personal experience.
- Adjust your thinking. Be the first to add your personal experience.
- Test your solutions. ...
- Reflect on your process. ...
- Practice regularly. ...
- Here's what else to consider.
3. Delay Decisions: When possible, postpone making decisions immediately after encountering the initial anchor. Taking time to gather additional information and consider alternative perspectives can help mitigate the influence of anchoring bias.
What is an example of anchoring bias in hiring? ›
For example, stating “They were referred by someone I trust, so I'm inclined to hire them even though they're not the most qualified candidate” exhibits anchoring bias because the manager is using a reference point (the person who made the referral) to anchor their decision-making, rather than focusing on the ...
What are the dangers of anchoring bias? ›
Individual effects
When we become anchored to a specific figure or plan of action, we end up filtering all new information through the framework we initially drew up in our head, distorting our perception. This makes us reluctant to change our plans significantly, even if the situation calls for it.
What are the advantages of anchoring effect? ›
This knowledge of the anchoring bias in negotiation can help us make and respond to first offers more effectively. Especially in negotiations around price, the party who makes the first offer often gets the lion's share of the value.
What are the disadvantages of the anchoring effect? ›
Here are some potential effects of anchoring bias:
- Poor decision-making. Anchor bias can lead to poor decision-making. ...
- Skewed expectations. Another potential effect of anchor bias is its ability to skew expectations. ...
- Dismissal of new information. ...
- Use multiple sources.
For example, a present-biased person might prefer to receive ten dollars today over receiving fifteen dollars tomorrow, but wouldn't mind waiting an extra day if the choice were for the same amounts one year from today versus one year and one day from today (see time discounting).
What is an example of cultural bias in everyday life? ›
'Cultural bias' refers to perspectives, attitudes, and behaviours based on the standards of one's own culture. Examples of cultural bias include linguistic interpretation, understanding of right and wrong, and racial discrimination, among others. These can manifest in multiple ways.
What is an example of availability bias in everyday life? ›
Examples of Availability Bias
Excessive coverage on the news or social media about plane crashes uses vivid images and stories to elicit an emotional response. That's why many people develop a fear of flying - they remember those images the next time they fly.
What is an example of belief bias in everyday life? ›
An example of the belief bias is that someone might think that the argument “all fish can swim, and salmon can swim, therefore salmon are fish” is logically sound, because its conclusion aligns with their preexisting beliefs (that salmon are a type of fish), even though this argument is actually logically unsound ( ...
