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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/

Are Celebrities Really THAT Perfect? How the Halo Effect Impacts the Way We View and Treat Others

November 20th, 2020 No comments

Have you ever seen a celebrity that you loved and idolized do something wrong? For example, a few years ago the actress Reese Witherspoon’s husband got a DUI while she was driving with him. Reese was quite rude to the police that pulled them over, which caused her to also get arrested for disorderly conduct. She asked the police if they knew who she was, and then when they responded no she warned that they were “about to find out”. She also ignored instructions from the police officer to stay in the car, and resisted arrest.

Chances are, if you were a fan of the actress like I am, you were pretty shocked to hear this story. Despite never having met Reese Witherspoon personally, you assumed she was a kind, respectful person who would never do or say these kinds of things. You may have even been shocked by Reese’s appearance in her mugshot, where she appears disheveled and not like her usual, made-up and presentable self. Why are we so shocked by this, when Reese Witherspoon is literally a stranger to us??

Reese Witherspoon as we “normally” picture her

Reese Witherspoon’s mug shot following her husband’s DUI

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“Ohhh, ‘Cue!'”: Cue-Dependent Forgetting and Study Techniques

November 26th, 2019 2 comments

Picture yourself in a classroom taking a history quiz. You don’t consider yourself a history buff of course, but you feel as if you studied well enough. You breeze through the questions, until you come across one that stumps you a bit: “Which U.S. President served the shortest term?”. You have to know this, of course, because you remember looking over it yesterday. The weight of familiarity is killing you, as you rack your brain and sort through the order of United States Presidents you thought you had memorized. When you studied, you paired the President’s last names along with common words that sounded similar–Lincoln and Linkedin, Kennedy and candy– you thought you pretty much had it down. Your heart thumps as you begin to look around the room, hoping something will strike your memory and soon your attention is drawn to how weird your teacher’s hair looks today. Hair, hair, Harrison! Suddenly you have it, William Henry Harrison was the President who served the shortest term.

Ok, let’s try that scenario again: you find yourself looking around the room for something to spark that lightbulb in your mind, but nothing seems to do the trick. Your professor is bald and always has been. You simply just can’t remember the name you were looking for and accept defeat. You stare daggers at their head as you leave that question blank and go onto the next one.

What made these two scenarios so different? The second scenario describes a cognitive psychology term called “cue-dependent forgetting” where a person is unable to remember information in the absence of a retrieval cue (Chandler & Gargano, 1995). A retrieval cue in this case is something that signals or prompts the memory of something that you associated with it (Chandler and Gargano, 1995). In the previously described scenario, the retrieval cues were the common words that sounded similar to the President’s names. This is why, when the retrieval cue for Harrison (“hair”), was forgotten, you were unable to answer the question. Pairing items as a form of studying may seem like an efficient way to quickly memorize material, but as seen in the example, it isn’t always reliable. Why does cue-dependent forgetting happen? And are there ways to prevent it from having a negative effect on test performance? These questions can be understood with a quick summary of how memory works.

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Rhyming for a Reason: Why Rhyming Slogans are More Effective in Communicating Big Ideas

November 26th, 2019 2 comments

If you’ve been to a college or interacted with a college student, you know how demanding the academic requirements are. Would you believe me if I said, “C’s get diplomas”? Sure. That makes sense, after a minute of thinking… But what if I had said, “C’s get degrees”? Boom. Got it. You’ve probably heard that one before, and there’s a reason why. The second statement communicates the main idea quicker than the first, even though both convey the same message. 

The Rhyme as Reason Effect (also called the Eaton-Rosen Effect) is the phenomenon that occurs when a person believes that a saying is more accurate when it rhymes. By contrast, a saying that means the same thing, but does not rhyme, is judged as less accurate. Like the example above. A second example that you’ve probably heard before is the saying, “What sobriety conceals, alcohol

“A drunk mind speaks a sober heart” — Jean-Jacques Rousseau

reveals.” This is judged as more accurate than, “What sobriety hides, alcohol reveals,” or “What sobriety conceals, alcohol shows,” even though all three statements are saying the exact same thing. So now you may be asking, why does this happen? Is it just because rhyming phrases are more fun to say, or is something else going on? Let’s think about this. 

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The Identifiable Victim Effect: Why you should reconsider donating to the child on GoFundMe

April 15th, 2017 2 comments

What kinds of charities do you give to? What spurs you to give to them? Is it images on GoFundMe of your friend’s neighbor’s child suffering from cancer, or the story of an exploited woman finding refuge and employment through a non-profit? Do you get a feeling of satisfaction when you type in your annual donations as deductibles to send to the IRS?

These are questions that can be answered and understood through the Identifiable Victim Effect, which says that people are more willing to give aid when they can identify a specific victim who will benefit from their donation. That is, when you or I hear a suffering child’s story or see their picture, we are more likely to whip out our wallets.

Why is this? It isn’t a rational or effective strategy for doing the most good for the most people. People donated $700,000 upon hearing the publicized plight of Baby Jessica who fell into a well in 1987, an amount of money that was probably not necessary to save Baby Jessica and perhaps should have been shared with other necessary causes, such as the thousands of nameless babies who are abandoned and dying around the world (Small, Loewenstein, & Slovic, 2007). The Identifiable Victim Effect does not rely on logic, so its explanation certainly isn’t going to be found in the sensible decisions of kind citizens.

What a cute child! His story of suffering from cancer raised more than twice the amount of the original goal. Source: GoFundMe.

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Cognitive Processes in Consumer Decision Making About Luxury Products

May 2nd, 2014 1 comment

Have you ever wondered why consumers prefer luxury products? Many luxury products do not offer significantly more features than their standard competitors, yet they command a much higher price in the market. There are a multitude of factors that lead to consumer preference for a luxury brand or product, such as aesthetic appeal or brand status. Researchers in a study titled “Priming Thoughts About Extravagance: Implications for Consumer Decisions About Luxury Products” investigated the underlying cognitive processes that govern our decision-making regarding luxury products. Read more…

Being able to sing along: Semantic priming and familiar songs

April 29th, 2013 3 comments

Sing3Have you ever heard the saying, “If I could remember school work like I remember lyrics, I’d be a genius?” It is true that many people remember an immense number of songs throughout their lifespan. Melodies for popular songs are almost unforgettable, and learned lyrics can stay in memory for a lifetime (Bartlett and Snelus, 1980). Memory for songs is contained in two stores that have two separate functions: episodic and semantic memory. Episodic memory allows you to remember the “when,” and “where,” of things, so recalling the first time you ever heard “Hey Jude” by the Beatles would use episodic memory. Semantic memory refers to remembering the facts and vital information about something – the “what” – but not being able to specifically recall when you learned that information. Remembering the lyrics and tune to “Hey Jude,” uses semantic memory. It is not necessary for you to remember the first (or last) time you heard the song in order for you to be able to sing along.

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