Anchoring Bias is the tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. During decision-making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.
A good example of this is when you go to buy something in the market in Marrakesh, Morocco. When you walk into the shop and see that beautiful lamp that you never knew you had always wanted, it is time to start bargaining. When you ask the shop owner for the price, the price he gives you becomes an anchor for your negotiation.
If he starts off the price at 100 USD, you will then judge the price that you pay based on that first price. If you end up paying 60 USD for the lamp, you will feel that you were successful in your bargaining. If he starts off with 250 USD, you will be thrilled if you are able to pay only 140 USD! (Wow, you must be a tough bargainer!) But the reality is that unless you are an avid lamp collector, you have no personal understanding of the value of the lamp. Your decision to buy the lamp, and your subsequent sense of satisfaction with the price, all come down to the first piece of information you received - the original price quoted by the shop owner.
Anchoring bias is not just about shopping. Englich and Mussweiler (2001) found that anchoring bias could play a significant role in determining sentencing in courtrooms. For their study, they used 19 young trial judges (15 male and 4 female) – with an average age of 29.37 and with an average of 9.34 months of experience. They were given a scenario of a rape case, including the demand from the prosecutor for either a 34-month sentence or a 2-month sentence. When told that the prosecutor recommended a sentence of 34 months, participants recommended on average eight months longer in prison than when told that the sentence should be 2 months – for the same crime.
One of the original studies on anchoring bias was done by Tversky & Kahnemann (1974). In this study, high school students were used as participants. Participants in the “ascending condition” were asked to quickly estimate the value of 1 X 2 X 3 X 4 X 5 X 6 X 7 X 8. Those in the “descending condition” were asked to quickly estimate the value of 8 X 7 X 6 X 5 X 4 X 3 X 2 X 1. Since we read from left to right, the researchers assumed that group 1 would use "1" as an anchor and predict a lower value than the group that started with "8" as the anchor. The expectation was that the first number seen would bias the estimate of the value by the participant. The researchers found that the median for the ascending group was 512; the median for the descending group was 2250. The actual value is 40320.
The aim of Strack and Mussweiler's (1997) study was to test the influence of anchoring bias on decision-making. The researchers used an opportunity sample of 69 German undergraduates recruited from the university canteen at lunchtime; they were asked if they would take part in a general knowledge questionnaire. The participants answered questions on a computer screen. Each question had two components.
In one part of the experiment, participants were given an implausible anchor to see if it would have an effect. In other words - even if we know the suggestion is outlandish, does it still have an effect on our judgment?
The participants were randomly allocated to one of two conditions. In each condition, participants were asked one of the following questions:
After the participants indicated their answers, they were asked to provide an estimate of how he was when he died. The actual question was: