Anchoring

What we see first affects our judgement of everything thereafter. How we work out a fair price and ultimately what to choose is greatly dictated by the first piece of information we see.

"There is a form of anchoring that occurs in a deliberate process of adjustment, an operation of System 2. And there is anchoring that occurs by a priming effect, an automatic manifestation of System 1" — Thinking, Fast and Slow.

"People are much more sensitive to the relative value of comparable goods than to their absolute value" — Noise

People will underweight the opportunity cost and other less salient aspects of a decision, and may overweight the very salient immediate costs.

#judgment

  1. Lovallo, D., & Kahneman, D. (2003, July). Delusions of success: How optimism undermines executives’ decisions. Harvard Business Review. https://hbr.org/2003/07/delusions-of-success-how-optimism-undermines-executives-decisions
  2. Chapman, G. B., & Bornstein, B. H. (1996). The more you ask for, the more you get: Anchoring in personal injury verdicts. Applied Cognitive Psychology, 10(6), 519-540. https://doi.org/10.1002/(sici)1099-0720(199612)10:6<519::aid-acp417>3.0.co;2-5
  3. Enough, B., & Mussweiler, T. (2001). Sentencing under uncertainty: Anchoring effects in the courtroom. Journal of Applied Social Psychology, 31(7), 1535-1551. https://doi.org/10.1111/j.1559-1816.2001.tb02687.x
  4. Furnham, A., & Boo, H. C. (2011). A literature review of anchoring bias. The Journal of Socio-Economics, 40(1), 35-42. https://doi.org/10.1016/j.socec.2010.10.008
  5. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185, 1124-1131. https://doi.org/10.21236/ad0767426
  6. Epley, N., & Gilovich, T. (2002). Putting adjustment back in the anchoring and adjustment heuristic. Heuristics and Biases, 12(5), 139-149. https://doi.org/10.1017/cbo9780511808098.009
  7. Strack, F., & Mussweiler, T. (1997). Explaining the enigmatic anchoring effect: Mechanisms of selective accessibility. Journal of Personality and Social Psychology, 73(3), 437-446. https://doi.org/10.1037/0022-3514.73.3.437
  8. Englich, B., & Soder, K. (2009). Moody experts—How mood and expertise influence judgmental anchoring. Judgment and Decision making, 4(1), 41.
  9. Ariely, D., Loewenstein, G., & Prelec, D. (2006). Tom Sawyer and the construction of value. The Construction of Preference, 60, 271-281. https://doi.org/10.1017/cbo9780511618031.015
  10. Mussweiler, T., Strack, F., & Pfeiffer, T. (2000). Overcoming the inevitable anchoring effect: Considering the opposite compensates for selective accessibility. Personality and Social Psychology Bulletin, 26(9), 1142-1150. https://doi.org/10.1177/01461672002611010
  11. Zenko, M. (2018, October 19). Leaders can make really dumb decisions. This exercise can fix that. Fortune. https://fortune.com/2018/10/19/red-teams-decision-making-leadership/
  12. Enough, B., & Mussweiler, T. (2001). Sentencing under uncertainty: Anchoring effects in the Courtroom1. Journal of Applied Social Psychology, 31(7), 1535-1551. https://doi.org/10.1111/j.1559-1816.2001.tb02687.x
  13. Marchiori, D., Papies, E. K., & Klein, O. (2014). The portion size effect on food intake. An anchoring and adjustment process? Appetite, 81, 108-115. https://doi.org/10.1016/j.appet.2014.06.018
  14. Rastogi, C., Zhang, Y., Wei, D., Varshney, K. R., Dhurandhar, A., & Tomsett, R. (2022). Deciding fast and slow: The role of cognitive biases in AI-assisted decision-making. Proceedings of the ACM on Human-Computer Interaction, 6(CSCW1), 1–22. https://doi.org/10.1145/3512930
  15. Nicholas Epley and Thomas Gilovich. 2006. The Anchoring-and-Adjustment Heuristic: Why the Adjustments Are Insufficient. Psychological Science 17, 4 (2006), 311–318. https://doi.org/10.1111/j.1467-9280.2006.01704.x PMID: 16623688
  16. Epley, N., & Gilovich, T. (2006). The anchoring-and-adjustment heuristic. Psychological Science, 17(4), 311–318. https://doi.org/10.1111/j.1467-9280.2006.01704.x