We have already seen that the way a problem or question is framed can have a dra

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We have already seen that the way a problem or question is framed can have a dramatic impact on the answer that someone arrives at in our discussion of the Framing Effect. We will now consider how exposure to information, even if that information is entirely arbitrary, can heavily influence a person's decision-making. This occurs through what is formally known as the Anchoring and Adjustment heuristic.

This heuristic, discovered by the psychologists Amos Tversky and Daniel Kahneman, posits that in many scenarios, such as when estimating a number, people tend to start from an arbitrary but readily available value known as an 'anchor', and then adjust towards their final answer from that starting point. As we will see, an anchor can be anything from the sticker price on a car on sale in a yard, to the opening figure put forward during a salary negotiation. As a result of this heuristic, the final answers arrived at by individuals are more often than not heavily influenced or 'contaminated' by the anchor they started with.

The Anchoring & Adjustment heuristic has been tested extensively. Experiments used to demonstrate the heuristic typically involve exposing people to an anchor, either explicitly or implicitly, and then having them answer some form of question.

Examples

In one such experiment, subjects were asked to guess the age at which Mahatma Ghandi died. These subjects were split into two groups, which were each anchored to a different starting number by an initial question. The first group was asked "Did he die before the age of 9?", whereas the second group was asked "Did he die before the age of 144?". The average difference in ages between the groups was 17 years.

Most disturbingly, another experiment showed experienced German judges were more likely to impose a long sentence on shoplifters immediately after they had rolled a high number on a pair of dice.

In another experiment, it was demonstrated that the grades assigned to students' papers were largely influenced by the previous grades a student had achieved in the paper when these grades were made visible to the person marking. [In PHIL 105, we try to make sure you will get different markers for each assignment, and that they don't have access to your previous assignments, to avoid Anchoring and other biases.]

One prominent example exists in aviation, where it has been found that pilots are more likely to maintain their flight path into worsening weather conditions if the earlier weather reports are positive. Pilots mistakenly view the worsening conditions as only a marginal deterioration from the original conditions, as opposed to objectively assessing the safety of the new conditions. This is particularly worrisome, as poor weather conditions are one of the most frequent causes of fatal accidents in small aircraft.

In all these cases, the difference is attributed to the anchoring effect of the previously provided number(s). Numerous variations of this experiment have been conducted over the years, each with strikingly similar results; people of all ages and backgrounds are strongly influenced by their initial anchor.

Customer: So how much is this vehicle?
Salesperson: This incredible thing? For today only you can walk away with it for just $20,000!
Customer: I'm afraid that's far more than I'm willing to pay.
Salesperson: Okay, fine. Look, I've seen you around here a few times and I want to make sure we can get you into this awesome car. Let me speak with my manager and I'll see what sort of discount we can do for you. (speaks with manager off in the distance)
Salesperson: Alright I've spoken with my manager and I'm excited to tell you that we're willing to offer a 25% discount on the original price. You can drive away for just $15,000 if you sign today! You're saving $5,000.
Customer (thinking they've landed an excellent deal): Woo hoo! Hand me the keys.

In the above scenario, the Customer was anchored to the salesperson's original quote of $20,000. Even if $15,000 is objectively still too high a price for the car, when viewed in the context of the anchor it's easy to see why the customer thinks they are getting a bargain. A similar phenomenon is observed in salary negotiations. Evidence has shown that if an opening salary figure is higher, the final negotiated salary will also tend to be higher. This is worth noting if you're applying for a job where you will be able to negotiate your salary!

How can we avoid Anchors?

Although avoiding the influence of anchoring entirely is difficult, simply taking more time to reflect on your decision-making can go a long way to helping you do so. It is well established that biases, such as anchoring, tend to be exacerbated when decisions are made hastily. But it's not that simple. You might think that, in the car price and salary negotiation examples discussed above, anchoring can be avoided by taking a principled approach to negotiation. But where did you get your princpled starting figure? Probably from some other anchor, or from an anecdote, or via an availability heuristic, or from some other source influenced by a deep cognitive bias. So, like most of these obstables, you can reduce and manage the effects of the Anchoring heuristic, but you shouldn't expect to ever be completely unbiassed.

Where do you get your starting estimates from? And do they serve as an anchor from which you adjust your expectations? What other approaches might there be?

Explanation / Answer

we get the starting estimate from the first piece of information offered. If we look at this from Anchoring heuristic standpoint, we can also consider it to be a cognitive error, where an individual thinks of a target or estimate, which is generally, the first one they get, such as an expected price(like it happened in the case of the customer who had gone to purchase the car) . While making a decision, anchoring occurs when individuals use an initial piece of information to make subsequent judgments.

Yes, they do serve as anchor from which an individual can adjust their expectaions,For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth. According to this heuristic, people start with an implicitly suggested reference point (the "anchor") and keep making adjustments in order to reach to their estimate. These adjustments are usually insufficient, giving the initial anchor a great deal of influence over future assessments and remain in close proximity of the anchor.

the other approaches might include:

Selective accessibility: it proposes that when given an anchor, an individual making a decision will evaluate the hypothesis that the anchor is a suitable answer. This explanation assumes that an individual making a decision, considers the anchor to be a plausible value so that it is not immediately rejected, which would preclude considering its relevant attributes.

Attitude Change : it states that, providing an anchor changes someone's attitudes to be more favorable to the specific attributes of that anchor, biasing future answers to have similar characteristics as the anchor.

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