What Is Anchoring (Anchor) In Behavioral Economics?

Anchoring is a cognitive bias that occurs when people rely too heavily on the first piece of information they receive (the “anchor”) when making decisions. This bias can cause people to make judgments that are not necessarily logical or based on all of the available information. For example, if someone is trying to estimate the number of people who live in a certain city, they may be influenced by the first number they hear (the anchor), even if it is not relevant or accurate. This bias can lead people to make suboptimal decisions and can be difficult to overcome. To avoid anchoring bias, it is important to consider a range of information and to avoid making judgments based solely on the first piece of information that is presented.

Related Behavioral Economics Terms