Anchoring Bias

Anchoring bias is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. During decision-making, this initial anchor influences subsequent judgments and evaluations.

For example, if you first see a shirt that costs $1,000 and then see a second one that costs $100, you might perceive the second shirt as cheap, even if it’s actually quite expensive. The initial price of $1,000 serves as an anchor, shaping your perception of the subsequent price.

Anchoring bias can affect various areas, including:

1. Negotiations: The first offer in a negotiation can set the tone for the rest of the discussion.
2. Pricing: Initial price points can influence consumer perception of value.
3. Estimates and Forecasts: Initial estimates can skew subsequent judgments.
4. Medical Diagnoses: Initial impressions can influence subsequent diagnostic decisions.

Understanding and mitigating anchoring bias involves being aware of its influence and considering information and decisions independently of the initial anchor.