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Cognitive Bias Bootcamp: Anchoring Bias [1]

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Date: 2023-03-20

Ha! You're stuck now!

Hi folks! At long last it’s that time again for another entry in the Bootcamp series, and today’s offering is one anyone doing any negotiating should remember well and take to heart. Let’s talk about… the Anchoring Bias.

But before we do, let’s take a minute to review just what a Cognitive Bias is. Cognitive biases are something we all have, to varying degrees (and the degree to which we experience them can vary depending upon circumstances, too). To put it briefly, you can think of cognitive biases as systemic faults in our thinking, usually caused by our brains attempting to simplify or make sense of the input being received. These simplifications or shortcuts can lead to errors in thinking and lead us astray in reaching accurate conclusions, so it’s good to be aware of these, as sometimes you can consciously steer yourself away from these mistakes.

So...now back to the Anchoring Bias.

The Anchoring Bias occurs when our brains latch onto and rely upon the first piece of information we receive on a topic too heavily. It’s perhaps best known through examples in shopping and negotiation.

Here’s an example:

Suppose you’re out shopping for a car. The first one the dealership shows you is $50,000. That’s way too high for your budget, so you move on to another. The next car the sales person shows you is $35,000.

This is where the Anchoring Bias kicks in. Having started out with a car listed at $50k, $35k might seem comparatively cheap. Maybe even enough to move the needle towards purchasing, even if that $35k is still above what you’d thought you wanted to pay when you walked onto the lot.

The reverse could also be true. If you’d started with the $35k vehicle, suddenly $50k may seem extravagant. Your frame of reference has been set by the first piece of information you received, and it’s now coloring your view of subsequent events.

This is why knowledge of Anchoring Bias can be so important as a negotiating strategy. If you’re negotiating pay for a new job, for example, you might want to set your initial offer higher than what you actually expect to get. Maybe you actually expect to get about $75,000, so you enter the negotiations by throwing out $90k. By anchoring the negotiation at the higher point, hopefully you can play on the other side’s anchoring bias, and hey, if you “settle” for $80k in the end, that’s the gravy, right?

By the same token, the employer might try to low-ball a bit and throw out and offer like $60k per year, even though they may fully expect to wind up around that $75k mark in the end, for the same reason. They are trying to “set the anchor” and if they can get you to agree to just $70k, well, hey, they just got you to work more cheaply than they had expected.

This works within a range, though, so it helps to keep things realistic. If the same employer were to offer you just $30k, you’d probably scoff, roll your eyes and walk right out of the room. In the car example, if the first car was $100k, it’d roll right off your radar as being way to extravagant. So one key in the Anchoring Bias is that the initial anchor has to be realistic enough for the subject’s brain to lock on to as a serious data point.

Anchoring doesn’t just work with numbers, it should be noted, though that’s the easiest avenue for providing examples because, well, numbers are numbers. But we can also lock onto other information in the same way. This is part of why political operatives want to get their side of the story out quickly and get talking points out, because it not only establishes the narrative, but also sets that anchor point, potentially making it just that bit harder for the other side to push back.

As always with cognitive biases, a way to combat them is to first of all be aware they exist and how they work (hence the purpose of these Bootcamp entries), and also being aware of your own thought processes. When shopping or negotiating, keep calm and don’t make hasty decisions. Give your brain some time to process and THINK about the information you’ve been given. This gives your brain a little time to “reset” and maybe overcome that anchor bias.

Until next time, folks!

Prior Bootcamp Installments

Logical Fallacies Bootcamp:

The Strawman

The Slippery Slope

Begging the Question

Poisoning the Well

No True Scotsman!

Ad Hominem

False Dilemma

Non Sequitur

Red Herring

Gamblers Fallacy

Bandwagon Fallacy

Appeal to Fear

The Fallacy Fallacy

Appeal to Personal Incredulity

Appeal to Authority

Special Pleading

Texas Sharpshooter

Post Hoc

Appeal to Nature

Furtive Fallacy

Alphabet Soup

Cognitive Bias Bootcamp:

Bystander Effect

Curse of Knowledge

Barnum Effect

Declinism

In-Group Bias

Hindsight Bias

Survivor Bias

Rhyme-as-Reason Effect

Apophenia (& Paradoleia)

The Dunning-Kruger Effect

Confirmation Bias

Critical Thinking Bootcamp:

Sea Lioning

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[1] Url: https://www.dailykos.com/stories/2023/3/20/2159216/-Cognitive-Bias-Bootcamp-Anchoring-Bias

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