Anchoring Bias: 5 Examples of the Psychology Concept

Anchoring bias is a cognitive psychology concept about the decision-making process. It’s also a prominent subject in behavioral finance and social psychology. A person is guilty of anchoring bias when they assume an initial anchor—the first piece of information they hear—must be close to the correct answer for which they are looking.

This form of confirmation bias works by priming the brain to think an initial value must be important even when it’s completely irrelevant or irrational to include it in decision-making. Other terms for anchoring bias include adjustment heuristic and selective accessibility.

Anchoring bias can take shape in a litany of ways. Here are five areas in which you might see the anchoring effect occur in real-life situations:

1. 1. Bidding: Factors that are not totally obvious might influence a person’s starting point when they are bidding on something. Dan Ariely, a psychology and behavioral economics professor, asked people to consider the last two digits of their social security numbers. This served as their anchor price. Next, Ariely asked to bid on items offered to them. Those with higher social security digits would offer higher prices, while those with lower ones would bow out of bidding earlier.
2. 2. Estimations: If you must estimate a figure, outside factors might influence the first number you throw out. Consider a well-known example of anchoring bias involving estimation from Judgment Under Uncertainty: Heuristics and Biases by Israeli psychologists Daniel Kahneman and Amos Tversky. They asked people to spin a wheel filled with numbers, look at the number it stopped on, and then estimate how many African countries were in the United Nations. Those who stopped at higher numbers on the wheel thought the percentage was higher and vice versa, regardless of the fact there was no correlation.
3. 3. Research: In general, researchers must be wary of anchoring bias. If researchers allow the first instance of data they come across to color the rest of their literature review and experimentation, they might be guilty of anchoring bias. If they reflexively disregard anything that doesn’t align with the first piece of data that stood out to them, then they have succumbed to the anchoring effect.
4. 4. Salary negotiation: Any kind of negotiation can involve anchoring bias or similar error in judgment, but people commonly have experience with this in salary negotiation. The first offer a person makes during a salary negotiation often serves as the reference point for the rest of the conversation, even if the initial price tag is too low or too high by more reasonable metrics.
5. 5. Sales: The first price or valuation someone presents at the start of a used car or real estate sale generally influences a person’s perspective on the value of the asset. It also sets the tone for any and all negotiation, even if the sales price shouldn’t be anywhere close to the original price that the seller or buyer offered.
6. 6. Sentencing: Punishment versus leniency is an area that can see effects of anchoring bias. Consider the findings of cognitive scientists Birte Englich, Thomas Mussweiler, and Fritz Strack, who tested anchoring bias by studying judges and sentencing. In the course of a trial, a prosecutor makes a recommendation for a criminal sentence to a judge. These scientists shared fictional court cases with judges and provided certain judges a higher sentence suggestion and other judges a lower one. The researchers found that those judges who received the higher suggestion would hand out harsher, longer sentences and the latter group of judges would be more lenient.

Debiasing is the fundamental way to avoid the effects of anchoring bias. This is easier said than done—our brains are hardwired to take these sorts of shortcuts. To debias, take a step back from your own thinking process. Ask yourself if you’re letting the first thing you heard about a given subject irrationally color your decision-making process about it now. Each time you make this diagnosis, it might become easier to avoid the bias in the future.

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