Anchoring or
focalism is a
cognitive biasA cognitive bias is a person's tendency to make errors in judgment based on cognitive factors, and is a phenomenon studied in cognitive science and social psychology. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings....
that describes the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.
During normal decision making, individuals anchor, or overly rely, on specific information or a specific value and then adjust to that value to account for other elements of the circumstance. Usually once the anchor is set, there is a bias toward that value.
Take, for example, a person looking to buy a used car.
Anchoring or
focalism is a
cognitive biasA cognitive bias is a person's tendency to make errors in judgment based on cognitive factors, and is a phenomenon studied in cognitive science and social psychology. Forms of cognitive bias include errors in statistical judgment, social attribution, and memory that are common to all human beings....
that describes the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.
Background
During normal decision making, individuals anchor, or overly rely, on specific information or a specific value and then adjust to that value to account for other elements of the circumstance. Usually once the anchor is set, there is a bias toward that value.
Take, for example, a person looking to buy a used car. They may focus excessively on the odometer reading and model year of the car, and use those criteria as a basis for evaluating the value of the car, rather than considering how well the engine or the transmission is maintained.
Focusing effect
The
focusing effect (or
focusing illusion) is a
cognitive bias that occurs when people place too much importance on one aspect of an event, causing an error in accurately predicting the
utilityIn economics, utility is a measure of the relative satisfaction from, or desirability of, consumption of various goods and services. Given this measure, one may speak meaningfully of increasing or decreasing utility, and thereby explain economic behavior in terms of attempts to increase one's utility...
of a future outcome.
People focus on notable differences, excluding those that are less conspicuous, when making predictions about happiness or convenience.
For example, when people were asked how much happier they believe Californians are compared to Midwesterners, Californians and Midwesterners both said Californians must be considerably happier, when, in fact, there was no difference between the actual happiness rating of Californians and Midwesterners. The bias lies in that most people asked focused on and overweighed the sunny weather and ostensible easy-going lifestyle of
CaliforniaCalifornia is the most populous state in the United States, and the third largest by area. California is the second most populous sub-national entity in the Americas, behind only São Paulo, Brazil...
and devalued and underrated other aspects of life and determinants of happiness, such as low crime rates and safety from natural disasters like earthquakes (both of which large parts of California lack).
A rise in income has only a small and transient effect on happiness and wellbeing, but people consistently overestimate this effect.
KahnemanDaniel Kahneman is an Israeli psychologist and Nobel laureate, notable for his work on the psychology of judgment and decision-making, behavioral economics and hedonic psychology....
et al. proposed that this is a result of a focusing illusion, with people focusing on conventional measures of achievement rather than on everyday routine.
Anchoring and adjustment heuristic
Anchoring and adjustment is a psychological
heuristicHeuristic is an adjective for experience-based techniques that help in problem solving, learning and discovery. A heuristic method is particularly used to rapidly come to a solution that is hoped to be close to the best possible answer, or 'optimal solution'...
that influences the way people intuitively assess probabilities. According to this heuristic, people start with an implicitly suggested reference point (the "anchor") and make adjustments to it to reach their estimate. A person begins with a first approximation (anchor) and then makes adjustments to that number based on additional information.
The anchoring and adjustment heuristic was first theorized by
Amos TverskyAmos Nathan Tversky, was a cognitive and mathematical psychologist, and a pioneer of cognitive science, a longtime collaborator of Daniel Kahneman, and a key figure in the discovery of systematic human cognitive bias and handling of risk. Much of his early work concerned the foundations of...
and
Daniel KahnemanDaniel Kahneman is an Israeli psychologist and Nobel laureate, notable for his work on the psychology of judgment and decision-making, behavioral economics and hedonic psychology....
. In one of their first studies, the two showed that when asked to guess the percentage of African nations which are members of the United Nations, people who were first asked "Was it more or less than 45%?" guessed lower values than those who had been asked if it was more or less than 65%.
The pattern has held in other experiments for a wide variety of different subjects of estimation. Others have suggested that anchoring and adjustment affects other kinds of estimates, like perceptions of fair prices and good deals.
Some experts say that these findings suggest that in a negotiation, participants should begin from extreme initial positions.
As a second example, consider an illustration presented by MIT professor
Dan ArielyDan Ariely is an Israeli professor of behavioral economics. He teaches at Duke University and is head of the eRationality research group at the MIT Media Lab.-Biography:...
. An audience is first asked to write the last 2 digits of their social security number, and, second, to submit mock bids on items such as wine and chocolate. The half of the audience with higher two-digit numbers would submit bids that were between 60 percent and 120 percent higher than those of the other half, far higher than a chance outcome; the simple act of thinking of the first number strongly influences the second, even though there is no relevant connection between them.