Don’t Let Your Anchor Control Your Shopping: The Anchoring Bias
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
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 you did not want to buy the long-sleeved shirt when it was $29 but immediately bought it as soon you noticed it used to be $60? It was the exact same potentially itchy shirt for the same price in both scenarios, but what made it more intriguing in the second? Additionally, why did you buy the winter jacket as soon as you saw it was $115? Why didn’t you 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
Numbers constantly 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 is one of the most robust cognitive heuristics in human judgment. Human beings make hundreds to even thousands of decisions every single day. Heuristics refer to the mental shortcuts that allow individuals to make such judgments quickly and efficiently without much mental effort. Such mental shortcuts can be found in judgments as simple as what to eat for dinner to something more complex like deciding if it’s safe to swim in the ocean. For example, one might quickly decide to avoid the beach and the ocean on a hot, summer day because the short newspaper article they read earlier in the week about a shark attack easily comes to mind and thus increases the dangerous likelihood of such an event in their mind. The anchoring bias specifically concentrates on the human tendency to make judgments that are biased toward an initially presented value. In other words, the subconscious mind’s 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. For example, when someone is looking for a new car, the initial price the automobile salesperson throws out is often used as a standard for the rest of the negotiations. 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).
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 your seemingly rash behavior while shopping. First, let’s start with the small, yet important detail in which you completely disregarded the 99 cents on the price tag of the long-sleeved shirt. The anchoring effect sheds light on such a moment as you appeared to have latched onto the numbers before the decimal place as the ‘anchor.’ More specifically, you seemed to use the very first piece of information you learned to make the subsequent decision of buying the shirt or not rather than focusing on the whole value. The rushed nature of the moment also played a significant role as you did not seem to have the ability to take the time to truly make a concrete decision. In addition, a similar phenomenon occurred when you discovered that the long-sleeved shirt used to be $60. While looking at the sale sign above the clothing rack, you latched onto the $60 as the anchor and therefore based the subsequent decision on the notion that it was basically free money compared to the original price and a no-brainer purchase. The second scenario consists of a similar process in which you subconsciously placed the average price of $150 as the anchor. Therefore, when you finally arrived at the clothing store, whether you were consciously aware of this or not, you were on the narrow lookout for a winter jacket with little deviation from the price tag of $150. Then, once you laid your eyes upon a jacket for $115, you immediately bought it because it was $35 less than what you were expecting to pay and, once again, thus, almost like free money in comparison to the average price. 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. In general, as mentioned earlier, judgments are often independent of the informational relevance of the anchors and therefore irrelevant anchors can be just as powerful as relevant anchors in terms of swaying subsequent decisions. In fact, a large percentage of individuals often unconsciously rely upon irrelevant anchors in a multitude of situations such as ones in which the individual lacks a solid foundation of knowledge upon the matter.
Participants in the Tversky and Kahneman study make judgments about the percentage of African nations in the UN.
For example, a situation in which someone is asked to estimate the number of jelly beans in a jar or, in this study, the percentage of African countries in the United Nations (UN). In this particular study, subjects were found to repeatedly rely upon the irrelevant anchor of the number generated through spinning a wheel of fortune because, once again, they most likely did not even know how to make an educated guess upon the matter. Therefore, the irrelevant value generated by the wheel of fortune time and time again was found to be used as a standard during the subsequent judgment as those who landed on 10 would guess roughly 25%, whereas those who landed on 65 would estimate a higher average of about 45% of the countries.
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
Individuals cannot fully process all of the information in their environment.
capacity. For example, while sitting in a classroom do you pay attention to the type of floor such as if there is a rug? How about the color of the walls? 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. For example, you might not have processed the color of the walls because you were too focused on placing your cognitive resources towards learning the material on the board. 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. For example, when told that a certain type of car costs a great amount of money, one might only search for positive information about the car in their memory such as how it is safe and reliable. 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, individuals 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.
The phenomenon of confirmatory hypothesis testing can be seen in a study by Chapman and Johnson (1999) in which participants were asked to make a judgment about the age of the well-renowned 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. Conversely, 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.
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 a great amount about the shopping scenarios as the individual had a hair appointment looming over them and thus had a lot of pressure to be in and out of the clothing store quickly. The thought 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).
An individual with a high cognitive load.
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 in times of decision-making, regardless of whether you are aware of the anchoring bias or not, can increase the overall accessibility of anchor-inconsistent knowledge and thus generate a less biased final judgment.
The anchoring bias 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
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