Welcome back to Wayfinder, your fortnightly compass for navigating life’s toughest decisions.
Imagine you're at an antique market, and you stumble upon a peculiar-looking vase. The seller, sensing your interest, casually mentions it's from the 18th century and starts the bid at a hefty $500.
From that moment on, regardless of its real value, that initial price tag, the anchor, influences how much you're willing to bid. Welcome to the world of anchoring.
Anchoring bias is like a mental shortcut where the first piece of information we encounter—the ''anchor'—disproportionately influences our subsequent judgements and decisions.
In one now-famous experiment, psychologists Amos Tversky and Daniel Kahneman asked participants to estimate the percentage of African nations in the United Nations.
Before answering, they spun a wheel with numbers 1 to 100.
Bizarrely, those who landed on a higher number guessed higher percentages. Their estimates were 'anchored' to a random number, even though there was no correlation between the two activities.
Another study I love took place at NYU. Researchers had students read some sentences and then walk down the hall to perform a test in another room.
But the real experiment actually took place in the hallway.
The sentences one set of students read were sprinkled with words one might associate with being old: “Worried,” “Florida,” “old,” “lonely,” “grey,” “bingo,” and “wrinkle.”
The researchers secretly timed how long it took students to walk down the hallway. The ones who had been primed with these "old" words suddenly took significantly longer to walk down the hall than those who hadn't seen them.
Anchoring bias is like navigating with a skewed compass; the first step taken can mislead every step that follows.
Anchors in daily life
Anchoring isn’t confined to market stalls and shopping decisions. It permeates various facets of our lives:
Negotiations: The first offer usually sets the tone for the rest of the negotiation. A high initial salary offer can make subsequent offers seem more reasonable, even if they're still above market rate.
Economic Expectations: Initial forecasts, even if proven wrong later, can influence public sentiment and reactions to financial data.
Self-perception: Have you ever been told you're "naturally gifted" or "pretty useless" in a subject at a young age? Such statements can act as anchors, affecting how you view challenges in that area throughout your life.
Releasing the Grip
So, how do we free our decision-making from the stealthy grasp of anchoring bias? A few strategies can help:
- Awareness: Recognize that anchoring is a common, almost universal, human tendency. Just knowing about it can reduce its impact.
- Question Initial Information: Always ask, “Is this information reliable? Is there a broader context I should consider?”
- Seek Multiple Perspectives: Don’t rely on the first piece of data. Before making a decision, gather information from a variety of sources. This can dilute the effect of any single anchor.
- Establish Your Own Anchors: Before being exposed to external information, set your own benchmarks or values. For instance, decide on a reasonable price for a product before checking the price tag. Or decide on the minimum/maximum you'd be willing to accept before negotiating.
- Delay Decision-Making: If possible, give yourself time to process information beyond the initial impact. Don't allow inertia to sweep you into a rushed and biased decision.
- Think of a recent decision. Did an initial piece of information influence you more than it should have? How might your decision have been different without it?
- When receiving new information, especially numerical data, do you automatically accept it, or do you seek to contextualize and verify it?
- How can you integrate a habit of questioning initial information in your everyday decision-making process?
While it's impossible to completely rid ourselves of biases, recognising them is a step towards more informed and objective decision-making.