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Don’t Let Your Anchor Control Your Shopping: The Anchoring Bias

November 23rd, 2020 No comments

Imagine walking into a clothing store before the holidays. You are on the lookout for a long-sleeved shirt to wear to a dinner party next week but do not have much time due to a haircut appointment in half an hour. While driving there you thought this would be a fairly quick and easy task, but now, while wedged between a mother and daughter, you are repeatedly asking yourself why you didn’t just buy something online. You don’t

Figure 1. Clothing rack during the holidays.

have time for this! Once you finally locate the long-sleeved clothing rack and maneuver through all of the people, you find the perfect black long-sleeved shirt. You hold up the shirt to get a better look and glance down at the price tag. The first two numbers on the price tag are two and nine which are followed by two small nine’s but you only fixate on the first two and nine. You decide that $29 is too expensive which is fine because the material seems like it would be itchy anyway. As you are putting the shirt back, you notice a big red sign above the clothing rack. The sign reads “50% off” in the middle with sixty dollars crossed out on the top followed by the new price of 29.99 dollars on the bottom. You freak out while thinking to yourself: “it used to be 60 dollars! I must get this!” It becomes a no-brainer and you immediately walk towards the cash register completely forgetting about the possibility of the material being terribly itchy. 

While walking to the cash register, you immediately remember that you were also supposed to pick out a Christmas present for your mother. Before leaving your house you briefly researched some popular winter jackets and read somewhere that the average price for a winter jacket is roughly $150. While quickly flipping through the jackets, you find a warm blue jacket that costs $115. You immediately buy it without much further thought. 

What just happened? Let’s unpack this shopping scenario together. Why do you think the individual did not want to buy the long-sleeved shirt when it was $29 but immediately bought it when she or he noticed it used to be $60? It was the exact same potentially itchy sweater for the same price in both scenarios, but what made it more intriguing in the second? Additionally, why did the individual buy the winter jacket as soon as he or she saw it was $115? Why didn’t the individual keep looking? 

Your intuition may lead you to believe that this occurred solely because they were both great deals, which they were, but empirical evidence states there’s more to this rash behavior than just two good bargains at a clothing store. Before diving into it, take a moment to think about how numbers are absolutely everywhere. You can see numbers on signs while driving, on the TV while relaxing, on reading assignments while

Figure 2. Numbers overwhelm our daily lives.

working, and even on food labels while eating. Yet a great deal of us, including myself, do not give much thought to such numbers unless they are directly related to the task at hand. For example, do you remember the numbers that were woven into your recent homework assignment? Do you remember the numbers that were presented in class or some advertisement on Instagram? How about the first number on this very post? Probably not. But believe it or not, those numbers were in some shape or form processed and could have played a role in a subsequent decision. In other words, such arbitrary and seemingly random values could have systematically manipulated your assessment of reality in terms of uncertain quantities. This cognitive phenomenon pertaining to human judgment is formally known as the anchoring bias and can help us further understand the shopping scenarios above.

The anchoring bias, also known as the anchoring effect, is one of the most robust cognitive heuristics in human judgment. Such a cognitive process concentrates on the human tendency to make judgments that are biased toward an initially presented value. In other words, the subconscious mind has a strong tendency to refer to recently encountered values while trying to make a decision or figure something out. Individuals frequently end up relying too heavily upon such previously presented values (i.e. anchors) as a reference or starting point in moments where motivation and ability to make a correct judgment are lacking. It is important to note that such judgments are independent of the informational relevance of the anchors. Irrelevant anchors generate similar effects in human decisions as to those of relevant informational anchors (Furnham & Boo, 2010). 

Figure 3. Individuals heavily rely on previously presented values to make subsequent decisions.

Through such a preliminary description of the cognitive bias, we can begin to further unpack the seemingly rash behavior of the individual while shopping. First, let’s start with the small, yet important detail in which the individual completely disregarded the 99 cents on the price tag of the long-sleeved shirt. The anchoring effect sheds light on such a moment as the individual appeared to have latched onto the numbers before the decimal place as the ‘anchor.’ More specifically, the individual decided to use the very first piece of information he or she learned to make the subsequent decision of buying the shirt or not rather than focusing on the whole. The rushed nature of the moment also played a role as the individual did not have the ability to make the correct decision. In addition, a similar phenomenon occurred when the individual discovered that the long-sleeved shirt they were hold used to be sixty dollars. While looking at the sale sign above the clothing rack, the human being latched onto the sixty dollars as the anchor and therefore based the subsequent decision on the notion that it was basically free money and a no-brainer purchase as similarly depicted in Figure 3. The second scenario consists of a similar process in which the human being subconsciously placed the average price of $150 as the anchor. Therefore, when the individual arrived at the clothing store, whether they were consciously aware of this or not, they were on the narrow lookout for a winter jacket with little deviation from the price tag of $150. Once he or she got ahold of a jacket for $115, the individual immediately bought it because it was $35 less than what they were expecting to pay and, once again, was almost like free money. This is starting to bring some much-needed clarity to the shopping scenarios, but there is still more to uncover.

One can further understand the anchoring bias and this particular shopping incident through the ground-breaking study by Tversky and Kahneman in 1974. This study illustrated the extent to which irrelevant information can manipulate one’s subsequent judgments as well as the general prevalence of the anchoring effect in the human decision-making process. In the study, Tversky and Kahneman had participants make a judgment centered around if the percentage of African countries in the United Nations (UN) was higher or lower than the value randomly generated by spinning a

Figure 4. Participants in the Tversky and Kahneman study make judgments about the percentage of African nations in the UN.

wheel of fortune in their presence. The participants were under the impression that the wheel could land on any number but, in reality, the wheel was rigged to stop on either the number 10 or the number 65. It is important to note that the wheel and the numbers had absolutely no connection to the correct percentage of African nations, but yet a connection was formed anyway in the subconscious minds of the subjects. Thus, the researchers found that those who landed on the 10 estimated roughly 25% of the UN members were African nations, whereas those who landed on 65 estimated a higher average of about 45%. This is a significant difference that was generated solely by the irrelevant act of spinning a wheel of fortune (to learn more about this particular study, press this link).  

Before diving any deeper into the content, it is highly important to underline the numerous cognitive processes involved in the anchoring bias. First, in order for the process to begin in the first place, the anchor must receive a sufficient amount of attention. Although this might sound fairly easy and straightforward, attention is not always guaranteed as human beings have a limited attentional

Figure 5. Individuals cannot fully process all of the information in their environment.

capacity. The amount of attention placed on stimuli often greatly depends upon the number of tasks being performed, the attentional demands of such tasks as well as the individual’s amount of available cognitive resources. Thus, it is critical that the anchor is somehow related to the individual’s general interests so that it receives some level of processing and encoding, allowing it to be stored and eventually retrieved from one’s memory (McBride & Cutting, 2019). 

The processed anchor is then subconsciously retrieved from memory in a moment in which the individual has to make sense of something. This can be understood through the selective accessibility model and more specifically confirmatory hypothesis testing and semantic priming. Confirmatory hypothesis testing refers to individuals retrieving information from one’s prior knowledge that supports or confirms what they are looking for. In a sense, it is similar to confirmation bias. Such a cognitive process can be found in the anchoring bias when individuals encounter a moment of uncertainty and consider the anchor to be a plausible answer. In other words, they tend to test whether the target’s value is equal to the anchor value by focusing primarily on retrieving anchor-consistent knowledge. Through such an act, the selective accessibility model comes into play which generally highlights how selectively retrieving information from memory makes it more accessible than others. Therefore, once retrieving relevant attributes of the anchor from memory, human beings selectively generate and thus activate semantic knowledge that is similar to the anchor. This selectively prompts or primes the information such that when it’s time for the individual to make a decision, they resort to such semantic knowledge as it has been rendered easily accessible. The final judgment comes to mind fairly quickly due to the priming as well as is highly influenced by the anchor-consistent information (Mussweiler & Strack, 1999). It is important to note that while the anchor primes features or attributes of the target that are compatible with the anchor, features that differ from the anchor are subsequently reduced in availability causing a rather biased outcome (To learn more about semantic priming, click this link). 

This can be seen in a study by Chapman and Johnson in 1999 in which participants were asked to make a judgment about the age of Gandhi. More specifically, participants were asked to make a judgment about whether Gandhi lived longer or shorter than 120 years which made the individuals search through their prior knowledge for information supporting the target’s notion of Gandhi’s old age. Such an act activated the confirmatory search for anchor-consistent information and thus such information became easily accessible for the final judgment. 

The anchoring bias is extremely pervasive in all forms of human judgment, however, such a phenomenon varies from person to person depending on individual differences in prior knowledge. Based on the finding that anchoring is mediated by the selective search of one’s knowledge about the particular target, the content of one’s knowledge base must be a critical variable in the process. The dispersion of distribution depends on the amount of knowledge one has about the matter. The more an individual knows, the more certain he or she is, and therefore the narrower the range of plausible values. Whereas, the less someone knows about the target, the wider the range of plausible values as one might only be aware of the general category that the target belongs to rather than the exact value itself. Thus, individuals can encounter the exact same anchor value but it may be processed quite differently depending on one’s knowledge base (Mussweiler & Strack, 1999). This could be seen in the shopping scenarios above as the individual may not have had a great amount of prior knowledge on winter jackets and therefore relied heavily upon the anchor of $150 rather than the physical features of the jackets. 

Cognitive abilities also play a role in the individual differences of the anchoring bias as all individuals are subject to the psychological constraints of the resource-limited nature of human cognition. More specifically, all individuals have varying levels of cognitive ability as well as engage in different cognitive loads on a daily basis. Elements such as time pressure and cognitive load can greatly influence how well one is able to thoroughly retrieve relevant information from their knowledge base. In particular, Blankenship et al. (2008) found that those who have a lower cognitive load have a higher ability to engage in deeper thinking as well as elaborate more upon background knowledge to develop concrete answers. Cognitive abilities can uncover more about the shopping scenarios as the individual had a hair appointment looming over them and therefore had a lot of pressure to be in and out of the clothing store quickly. The thoughts of the hair appointment as well as many other thoughts generated a high cognitive load and thus made it difficult for the individual to fully retrieve relevant information, leading to rash shopping decisions (Teovanović, 2019).

Figure 6. The dangers of anchoring when it comes to group decision-making.

What if the individual was with a group of friends? Would group decision making make the anchoring process more rational? We often assume that groups are less biased and make better decisions than individuals, but it turns out that empirical evidence outlines that groups often end up being as biased, if not more, than individuals operating independently. According to (Wilde et al. (2018), this often occurs because group members tend to pool preferences early on as well as often settle for either the majority or the median preference. Therefore, the more biased the individual preferences are within the group, the more likely such biased information will be selectively primed as such information is pooled and integrated together. Thus, based on this information, even if the individual in the shopping scenario was with a group of friends, he or she still would have made rash decisions. 

When it comes down to it, you cannot hide from the anchoring bias regardless of factors such as the relevance of anchor cues, motivation, and cognitive load. It is exceptionally robust and most of the time individuals are not even aware of it in the first place. That being said, some researchers have found that one technique that may help individuals mitigate the strength of such a cognitive bias is known as the consider-the-opposite strategy. According to Mussweiler et al. (2000) and the selective accessibility model, retrieving anchor-inconsistent information after accessing anchor-consistent information can increase the accessibility of anchor-inconsistent knowledge and thus generate a less biased final judgment. 

Unlike many cognitive biases, the anchoring effect has clear practical relevance for a multitude of decisions in the real-world. So the next time you are in a clothing store and about to make a decision, give a little thought to the potential impact of the anchoring bias. Take a moment and pause every time you feel the sudden urge to buy something because it is on sale or because it is far less expensive than you expected. This is not just a great day full of bargains. No, this is a scheme that the sales and marketing organizations have been putting in front of you for years and years. Do not fall victim to your own anchoring thoughts while holding that long-sleeved shirt or winter jacket. 

 

Reference 

Furnham, A., & Boo H. C. (2010). A literature review of the anchoring effect. The Journal of               Socio-Economics, 40(1), 35-42. doi:10.1016/j.socec.2010.10.008

McBride, D.M., & Cutting, J.C. (2019). Cognitive psychology: Theory, process, and methodology. Sage Publications, Inc.

Mussweiler, T., & Strack, F. (1999). Hypothesis-consistent testing and semantic priming in the         anchoring paradigm: A selective accessibility model. Journal of Experimental Social                   Psychology, 35(2), 136-164. doi:10.1006/jesp.1998.1364

Mussweiler, T., Strack, F., & Pfeiffer, T. (2000). Overcoming the inevitable anchoring effect: Considering the opposite compensates for selective accessibility. Personality and Social Psychology Bulletin, 26(9), 1142–1150. . 10.1177/01461672002611010 

Teovanović, P. (2019). Individual differences in anchoring effect: Evidence for the role of                   insufficient adjustment. Europe’s Journal of Psychology, 15(1), 8-24.                                    doi:10.5964/ejop.v15i1.1691

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science (New York, N.Y.), 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124

Wilde, T. R., Velden, F. S., & Dreu, C. K. (2018). The anchoring-bias in groups. Journal of                 Experimental Social Psychology, 76, 116-126. doi:10.1016/j.jesp.2018.02.001

 

Photos

https://webstockreview.net/image/clipart-clothes-clip-art/2519511.html

https://www.bernardmarr.com/default.asp?contentID=1376

https://thedecisionlab.com/biases/anchoring-bias/

https://www.youtube.com/watch?v=NFiDdbquWJY  

https://www.mentalup.co/blog/selective-attention 

https://www.searchenginejournal.com/a-personalized-entity-repository-in-the-knowledge-graph/379043/

Handwashing, Heliocentrism, and Global Warming: To Reject or Accept?

April 17th, 2017 4 comments

How often do you wash your hands? The Center for Disease Control recommends hand washing in numerous scenarios, such as before, during, and after preparing food, before and after tending to someone who is sick, before and after treating a wound, after going to the bathroom, after touching animals, and the list goes on. Now I know it might seem a little ridiculous to wash your hands as often as it is recommended, but I am crossing my fingers that you at least understand why it is necessary. One of the first things we teach our children is to always wash their hands, and how to do so effectively (such as washing for the duration of “Row, Row, Row Your Boat”… twice). If you don’t believe me when I say hand washing is deep-seated in our modern society, just look at the 3.1 billion dollar market for hand soaps (Nielsen 2016). I, for one, certainly get overwhelmed when I walk down the aisle at my local Target and have to choose between the exhaustive collection of soaps with which I can lather up. And if I don’t find any soap I like then I can make my way over to the various types of hand sanitizers nearby. We can credit Ignaz Semmelweis and his microbial discoveries for the normalization of hand washing in our culture, but can you imagine a world where we didn’t wash our hands? And even stranger – can you imagine rejecting the science behind it? 
Read more…

I knew it! The effect of hindsight bias and why you probably did not actually know it.

April 16th, 2017 1 comment

There is a cold crispness to the air, but the sun in the cloudless sky gives you the little bit of warmth you need to feel comfortable. It is an early November day, and it is time for the U-12 soccer championship. Maybe you are a player, a parent, a friend, even a referee here today. There are four teams here with the same goal in mind, to win all their games so that they get crowned champion. The Cheshire Rams are the ones you are hoping to win today. You do not know how the day is going to go because all of the teams here have had great records this season and are all very competitive for the title. Hours later, the Cheshire Rams have done it. They are champions! You are in the car riding back, and all you can think to yourself is “wow, I knew it would happen!”

http://articles.chicagotribune.com/2013-06-26/news/ct-x-0626-keilman-column-20130626_1_more-kids-score-childhood-obesity

 

What is Hindsight Bias?

Did you actually know that the outcome would happen as it did? The truth is, most likely not. Read more…