Understanding Anchoring Bias:

Understanding Anchoring Bias:
Anchoring Bias is a cognitive bias where people rely too heavily on the first piece of information they receive (the “anchor”) when making decisions or judgments.

Example:

If you’re shopping for a watch and the first one you see costs $1,000, all the other watches - even those that cost $500 - might seem like a bargain, even if $500 is still more than you’d usually spend. Your judgment is anchored to that initial $1,000 price.
How It Affects Thinking:

Decision-making: People often base decisions on an arbitrary reference point.
Negotiation: The first number mentioned often sets the tone for the entire discussion.
Estimations: When asked to guess a value (e.g., population, prices), people are influenced by numbers previously presented - even if they are unrelated.

Psychological Insight:

Anchoring happens because we adjust our judgments away from the anchor, but not far enough. The brain uses the anchor as a starting point, then makes small shifts - often insufficient ones.

How to Avoid It:

Delay judgment until you gather more information.
Consider alternative anchors or create your own based on objective data.
Be aware when someone (like a marketer or negotiator) is intentionally setting an anchor to influence your thinking.

Shervan K Shahhian