In the wide world of human psychology and decision-making, a curious phenomenon arises that leads us to question the objectivity of our choices: anchoring bias. This concept reveals how a seemingly insignificant number can significantly influence how we evaluate options, judge values and make decisions.
WHAT IS THE ANCHORING BIAS?
It is a cognitive pattern in which people rely excessively on an initial figure (the “anchor”) when making estimates or decisions, even if this figure is not relevant to the situation. This tendency can lead us to evaluate options and values based on this initial figure, influencing our judgment and perception of reality. Often, the anchor acts as a reference point that guides our decisions, sometimes without us being aware of its impact.
Let’s take an example to clarify how it leads to influence the subsequent decision-making process, even when this initial reference point may be completely arbitrary or of no real importance. Suppose you are in the process of buying a home and the real estate agent presents you with a starting price that is significantly higher than you had anticipated. From that point on, it is likely that your way of evaluating the prices of the other houses on the market will be influenced by this first figure, regardless of whether it actually represents the real values.
HOW TO IDENTIFY IT?
Identifying anchoring bias in our decisions and judgments is critical to making more informed choices. A clear sign is when an initial figure influences our assessments, even though it is not directly related to the decision we are faced with. As you read a few lines above, if we are buying a product and we are surprised when considering a previous price, it is possible that we are being affected by anchoring bias.
Another way to identify this is if our perception of how “expensive” or “cheap” a product is based primarily on an initial figure that we take as a reference. If we find it difficult to escape the influence of that number, it is likely that we are being affected by this bias.
But anchoring bias is not limited to large financial decisions; it is found in all aspects of our lives, for example, in negotiations. When you start negotiating with a high or low offer, it can influence the course of the entire negotiation, all the way to the end.
In the context of shopping, the labels “sale” and “discount” are often used to squeeze out this bias because it sets a price as an initial reference, prompting buyers to feel that it is a bargain, that they are getting money in their favor with this purchase.
Another common example is in the area of health and fitness. If someone sets an initial goal of losing a specific number of kilograms, that number becomes the anchor that guides their perceptions of success or failure. If that goal is not achieved, the person may feel that he or she has failed, even if he or she has made improvements in overall health.
WHY DO WE FALL INTO THE ANCHORING BIAS TRAP?
One explanation lies in the heuristic nature of our brains. Heuristics are mental shortcuts that we use to make quick and efficient decisions. In this case, anchoring becomes a shortcut, allowing us to base our decisions on a single figure rather than performing an exhaustive analysis of all options.
In addition, anchoring bias is related to not wanting to lose something. Once the anchor is set, we worry about losing what we have already gained or moving too far away from that benchmark, which can lead us to make decisions that keep us close to the anchor, even if it is not the best option.
TYPES OF ANCHORING BIAS
A specific figure acts as a benchmark for our assessments, even when it is completely arbitrary.
We compare one option with another that is presented first, influencing our perception of the differences between them.
Insufficient anchor adjustment
We adjusted our estimates based on the anchor, but not enough to arrive at a more concrete assessment.
HOW TO AVOID ANCHORING BIAS?
- Become aware. Recognize the presence of the anchor in your decisions and ask yourself if the initial figure is relevant to the choice you are making.
- Seek additional information by researching beyond the initial figure. Compare different sources and data to get a more complete picture.
- Consider multiple perspectives, reflecting on how the initial figure might be influencing your thinking, and try to look at the situation from different angles.
- If possible, set your own anchor. Create a benchmark that takes into account factors relevant to the decision, rather than relying on the first figure you find.