The ‘anchoring effect’ is the phenomenon that occurs when you consider a particular value for an unknown quantity, prior to estimating that quantity. Imagine you are asked to spin a wheel marked 0-100, write the number you got down and then have to answer the question “What do you think is the percentage of…?” Your estimated answer will be close to the number you had to consider. If the wheel stopped at the number 15, your answer might be 25%. If you get the question “Was Mother Theresa 112 years old when she died?”, your guess would be significantly higher than it would be if the anchoring question referred to the age of 40 years. Another example is the asking price on a house influencing what you consider a reasonable price. The anchoring effect is very important and common in our everyday lives. Our judgments are influenced by uninformative numbers.

Anchoring effects are produced by two mechanisms. One form of anchoring is an operation of System 2: deliberate adjusting. The other form is an automatic operation of System 1: priming. The anchoring and adjustment heuristic is a good strategy for estimating uncertain quantities: start from the anchoring number, assess whether it is too low or high and gradually adjust your estimated number. The adjusting process ends when people reach a certain level of uncertainty, which is usually too soon. An example of insufficient adjustment is the situation of a 16-year old listening to loud music and annoyed parents. The indulgent teenager will turn the music down, from extremely loud (high anchor) to a ‘normal’ volume, but probably fails to adjust it enough. Adjusting means deliberately trying to find reasons to mentally move away from the anchor, which requires effort. A mentally depleted person adjusts less (staying nearer to the anchor). Not adjusting enough is a failure of a lazy or weak System 2.

The priming effect of anchoring is explained by the same automatic operation of System 1 as suggestion. Suggestion is a priming effect, inducing compatible evidence. Low and high numbers activate different ideas in memory. A high temperature makes you retrieve summery memories, which leads to a biased estimation of the annual temperature. Bringing something to mind is sometimes enough to make you feel, see or hear it. The question “Was Mandela younger or older than 134 when he died?” results into your associative machine generating the impression of a very old man, although you immediately knew that Mandela did not live for 135 years. System 1 makes sense of statements by attempting to make them true, it tries to create a world in which the anchor is the truth.

What is meant by the anchoring index?

Anchoring is one of the few psychological phenomena that can be measured. One group of participants gets asked questions with a high anchor (135 years) and another group questions with a low anchor (30 years). The difference is 105 years. The difference between the mean estimates produced by both groups can also be measured. Imagine it being 55 years. The ratio of the two differences (55/105) is called the anchoring index: 52%. This is a common value, seen in various cases. The closer to 100%, the closer to the anchor someone stays.

Anchoring effects are particularly strong in decisions regarding money (how much we are willing to pay for something).

Anchoring seems reasonable in some situations, for instance when the questions asked are difficult. If you know nothing about the topic, you could assume that the anchor number is close to the truth. Remarkably, anchoring research shows that obviously random anchors can be just as effective as possible informative anchors. The anchoring effect does not occur because people believe the anchors are informative. How powerful random anchors can be was shown in the following experiment. Experienced judges were first informed about someone who was caught stealing and then had to roll a pair of rigged dice that would result into a 9 or a 3. The judges then were asked whether they would sentence the thief to an imprisonment lesser or longer than the outcome of the dice rolling (in months) and lastly what exact sentence they would give. The judges with the 9-result would sentence the thief to 8 months, the judges with the 3-results would sentence the thief to 5 months, resulting into an anchoring effect of 50%.

What are the uses and abuses of anchors?

Anchoring effects are very common in our daily lives. Some people try to exploit our gullibility. The use of arbitrary rationing as a marketing trick can be explained by anchoring effects. An example is a store promoting a price reduction of 15%, with a limit of 10 products per person on one day and no limit on other days. Customers bought twice as many products on the limit-days. This is not solely explained by anchoring. Rationing suggests that the products are selling out quickly, making people want to stock up. A similar strategy is used by house sellers. Making a first move by setting a listing price, the anchor, gives an advantage in the negotiation phase. In order to resist the powerful anchoring effect, potential buyers should active System 2: focus the attention and search the memory for counterarguments. You can focus your attention on the minimal offer or on the costs related to not reaching an agreement.

System 2 is susceptible to the biasing influence of anchors that make certain information easier to retrieve from memory. System 2 has no knowledge of and control over the effects of random anchors. People who deny that being exposed to random or nonsensical anchors (Mandela’s death at age 135) could have influenced their estimate are wrong. Priming and anchoring effects are similarly threatening, because we are unaware of the way it constrains and guides our thinking, even if we are aware of the anchor itself. Advice: assume that any number you see has an anchoring influence. Resist that influence by mobilizing your System 2, especially if the stakes are high.