What is Anchoring in Psychology?

What is Anchoring in Psychology?

Read on to learn about this largely unconscious process.

Anchoring is the tendency to make rapid assessments based solely on the first piece of information encountered. It helps us to help make sense of the things around us when faced with uncertainty or time constraints (Tversky & Kahneman, 1974).

But we tend to give too much weight to this initial information or to previous experience, which leads to inaccurate perceptions and errors in decision-making. The initial piece of information becomes an “anchor”, and as the name suggests, we are pulled toward it and tend to stick close to it even after learning new information (APA, 2023).

Anchoring in first impressions

An example we’re all familiar with is judging others on first impressions. Studies show that we can make judgments about people’s personalities in milliseconds (Willis & Todorov, 2016). These rapid evaluations are based on facial expressions, our memories of other similar people, and even how we see ourselves (Willard & Markman, 2017). These things give a starting reference point and allow you to make quick decisions about how to respond when you don’t know someone well. Unfortunately, we also tend to base future judgments of the person on this initial, sometimes superficial impression, which in turn affects our behavior toward them (Willard & Markman, 2017).

Anchoring in pricing & sales

Anchoring is used widely in sales. Sellers often set a price much higher than they expect to get. So, when they come down a bit, the buyer is more likely to go for it, even if it’s still overpriced.

Other examples of situations where anchoring occurs:

● Salary negotiations

● Making numerical estimates

● Marketing

● Criminal sentencing

● Medical diagnosis

“The pendulum of the mind oscillates between sense and nonsense, not between right and wrong.”
― Carl Gustav Jung

Benefits

As mentioned above, a benefit of anchoring is it allows for fast decision-making. It helps you make reasonable estimates and quick evaluations in complex situations when you have limited information or time.

There’s likely an evolutionary advantage to being wired this way. For our ancestors, it was probably important to be able to recognize an aggressive facial expression quickly. It was probably not a good idea to take the time to gather more information and carefully think over whether this person was actually going to be aggressive or if they were just having a bad day.

And in today’s environment, without a quick way of evaluating everyday situations, we’d spend way too much time and effort deliberating over small decisions. Some decisions may just not matter that much, such as what to have for lunch. Imagine taking the time to consider the pros and cons of each item on the menu and what factors may be influencing you. It’s probably fine to base your decision on your experience of what you’ve enjoyed previously.

Another benefit is that anchoring helps you to gauge quickly how others are feeling in social situations. If someone tells you they’ve just experienced a traumatic event such as the death of a loved one, or a happy occasion such as a marriage, we can make assumptions about how they’re feeling based on our own experiences—our memory is serving as the anchor in this case. From that knowledge, we can adjust our behavior accordingly.

Pitfalls

The main pitfall is that anchoring leads to inaccurate conclusions or poor decisions because we disregard, or don’t even notice, potentially crucial information. In addition, it can also lead to self-fulfilling prophecies. We tend to only give credit to information that supports our initial judgment, and discard or invalidate information that doesn’t. It’s not hard to imagine how this can lead to biased judgments about other people or incorrect conclusions about situations.

Marketers also use anchoring to their advantage. Knowing that people don’t tend to veer far from initial information, they make sure the first price people see is high. In addition, anchoring is also what makes multiple-unit pricing successful. For example, if there’s a sale sign showing “4 apples for $5”, we’re more likely to buy 4 even if we can buy them for $1.25 each. We’ve latched on to the 4. And the same thing applies when we see a sign stating “limit 5 per customer”. That becomes the amount you want.

How Does Anchoring Create Bias?

Anchoring creates bias because we jump to a readily accessible reference point to make quick judgments and then continue to give it too much weight (Berg & Moss, 2021). And even in the face of conflicting or modifying information, we tend to stick near the original assessment. In one study, even when researchers told the study participants to disregard the initial information given, participants still made judgments based on that anchor (Berg & Moss, 2021). This shows just how strong our brain’s tendency toward anchoring is.

Strange as it sounds, even random unrelated information can hook your brain. In one study, participants were asked for the last two digits of their social security number and then asked how much they would spend on different products. People whose last two digits were higher indicated they would pay more (Ariely et al., 2006). Just thinking about the social security number created an anchor.

How Might We Overcome Anchoring Bias?

● The first step is to become aware of the anchor. (This can be the hardest part.) Take a step back, and consider whether you’re relying too much on the first thing you learn, a first impression, or a previous experience.

● Delay making a decision.

● Challenge your initial impressions or conclusions.

● Do research, be open to new information, or listen to opposing arguments. Make the effort to think critically.

● Remember it’s okay to discard or modify initial judgments. We are all prone to biases. Recognizing this and revising your assessment is a sign of thoughtfulness and discernment, not weakness.

In Sum

Knowing that we are all susceptible to anchoring can help us be more aware of it, and perhaps encourage us to be more tolerant of others, especially when we encounter someone who sticks to their views despite evidence to the contrary. Furthermore, becoming more aware of anchoring effects can help us be less likely to judge others on first impressions alone. It may even improve our relationships and how we perceive ourselves.

References

● APA. (2023). Apa Dictionary of Psychology. American Psychological Association. Retrieved February 8, 2023, from https://dictionary.apa.org/anchoring-bias

● Ariely, D., Loewenstein, G., & Prelec, D. (2006). “coherent arbitrariness”: Stable demand curves without stable preferences. The Construction of Preference, 246–270.

● Berg, S. A., & Moss, J. H. (2021). Anchoring and judgment bias: Disregarding under uncertainty. Psychological Reports, 125(5), 2688–2708.

● Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131.

● Willard, D. F., & Markman, A. B. (2017). Anchoring on self and others during social inferences. Topics in Cognitive Science, 9(3), 819–841.

● Willis, J., & Todorov, A. (2016). First Impressions. Psychological Science.