Have you ever noticed how your first impression of something tends to stick with you, even when new information becomes available? This psychological effect is known as anchoring bias, a cognitive bias where people rely too heavily on the first piece of information they receive when making decisions.
Understanding Anchoring Bias
Anchoring bias occurs when individuals base their judgments on an initial reference point (the “anchor”) and adjust their decisions around it, even if the anchor is irrelevant or misleading. This bias can be seen in various aspects of life, from negotiations and shopping to investing and medical diagnoses.
Examples of Anchoring Bias
- Pricing and Shopping: Retailers often use anchoring to influence customers. For example, if a product is first displayed at ₹10,000 and then offered at a “discounted” price of ₹7,000, customers perceive it as a great deal, even if ₹7,000 is still expensive.
- Salary Negotiations: When a job applicant proposes a high initial salary expectation, the employer’s counteroffer tends to be higher than if the applicant had started with a lower number.
- Stock Market Decisions: Investors often get anchored to a stock’s past price, believing it will return to that level, even when market conditions have changed.
- Legal and Medical Fields: In courtrooms, the first proposed settlement amount can anchor future negotiations. Similarly, doctors may become anchored to an initial diagnosis, leading to misdiagnosis if they fail to consider alternative possibilities.
Why Does Anchoring Happen?
Anchoring bias occurs due to our brain’s tendency to rely on initial information as a reference point. This happens because:
- We prefer quick, simple decision-making rather than reassessing all available data.
- The first number or piece of information we encounter influences our perception of subsequent information.
- Our brains unconsciously adjust around the anchor, even when we try to be rational.
How to Overcome Anchoring Bias
- Be aware of it: Recognizing anchoring bias helps in making more rational decisions.
- Seek multiple perspectives: Consider alternative information sources before finalizing a decision.
- Delay decision-making: Taking time allows for better assessment beyond initial impressions.
- Challenge the anchor: Ask if the first information presented is relevant and accurate.
Final Thoughts
Anchoring bias affects daily life, often without us realizing it. By understanding and mitigating its effects, we can make better, more informed decisions rather than being trapped by initial impressions.
