Anchoring bias

What is anchoring bias?

Anchoring bias is the tendency for an initial piece of information—the anchor—to influence a later judgment or estimate more than it should. A buyer shown a high comparison price, for example, may judge a lower asking price more favorably. The first number gives the later judgment a starting point.

How anchoring works

In a well-known experiment reported by Amos Tversky and Daniel Kahneman, participants spun a rigged wheel that landed on either 10 or 65, then estimated the percentage of African countries in the United Nations. People who saw the higher number gave higher estimates, even though the wheel was visibly random.

Insufficient adjustment is one possible explanation: people start from a value and do not move far enough from it. Researchers have proposed other accounts, so that explanation should not be treated as the whole story.

An applied example

A premium restaurant item could provide a comparison price for other dishes. That makes it an idea to test, not a proven way to increase restaurant revenue. The Many Labs replication project found strong anchoring effects in explicit numerical-comparison tasks. It did not test restaurant spending. An unrelated number merely sitting in view is also different from a number the task asks someone to compare with.

Why it matters

Pricing, negotiation, and interface design all put starting numbers in front of people. Ask whether a suggested amount or comparison price gives useful information or distorts the judgment. Then measure what it changes in that setting.

Source

Tversky and Kahneman (1974), “Judgment under Uncertainty: Heuristics and Biases”.