Anchor Bias

The anchor bias is a Cognitive Bias - 20230221095209 that refers to the tendency for people to rely too heavily on the first piece of information they receive when making decisions or judgments. This initial piece of information, or "anchor," can influence subsequent judgments and decisions, even if the anchor is arbitrary or irrelevant.

For example, if someone is trying to estimate the value of a used car, and the first piece of information they see is that the car has been in an accident, it may influence their perception of the car's value, even if the accident was minor and did not result in significant damage. Similarly, if someone is trying to estimate the price of a product, and the first price they see is higher or lower than they expected, it may influence how they perceive the value of the product and what they are willing to pay for it.

The anchor bias is an example of how people can be influenced by irrelevant information and how it can affect their judgment. It’s important to be aware of this bias and try to overcome it by gathering more information, and also by considering multiple perspective to make a more informed decision.

Other Examples from Thinking, Fast and Slow

• “The firm we want to acquire sent us their business plan, with the revenue they expect. We shouldn’t let that number influence our thinking. Set it aside.”
• “Plans are best-case scenarios. Let’s avoid anchoring on plans when we forecast actual outcomes. Thinking about ways the plan could go wrong is one way to do it.”
• “Our aim in the negotiation is to get them anchored on this number.”
• “The defendant’s lawyers put in a frivolous reference in which they mentioned a ridiculously low amount of damages, and they got the judge anchored on it!”

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Status:: #wiki/notes/mature
Plantations:: Cognitive Bias - 20230221095209
References:: Thinking, Fast and Slow