Anchoring Bias

Let’s say I spin a wheel, with numbers ranging from 1 to 100. Then I ask you to guess a number of countries in Africa. Turns out, statistically, your answer will be much lower if the wheel has showed number 16 than if the wheel would have showed 87. Why would that happen? The number is clearly random and has nothing to do with the correct answer.

Turns out, even when presented with the clearly false information, your mind will use it as an “anchor” — a starting point you will use to make a guess. Then you then “slide” up or down from that anchor, until the result seems reasonable.

People rely too heavily on the piece of information that they have received first. They use it to form the initial guess, and then make incremental adjustments based on additional information, but that is usually not enough, and the initial random anchor keeps a lot of influence over future decisions.

Often that leads to mistakes, and people who know about it can use it to their advantage. For example when you’re buying a house, the salesman will first take you to the expensive house he does not expect you to buy, so that the next offer he shows you would seem mich more reasonable, even if it’s still overpriced.

To get rid of this bias, the first step is to be aware of it, try to observe your thinking, and notice when instead of coming up with an independent guess, you are making adjustment from some initial anchor. Then — think about the anchor in the opposite direction. If the initial number was too large you want to think about the one thats too small, and vice versa. That should help you to come up with a more accurate estimate.