Anchoring Bias

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Description of Anchoring Bias. Explanation.

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Definition Anchoring Bias. Description.

Anchoring even works when the first information given is clearly wrong...Anchoring Bias is the human tendency to rely too heavily on information, especially the first piece of information that is available (treated as an "anchor), when making subsequent judgments and decisions. It is also called Focalism.


During decision making. individuals anchor and 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.

 

Anchoring was pioneered by by Amos Tversky and Daniel Kahneman.

 

 

Anchoring in Psychology

In psychology, anchoring and adjustment is seen as a psychological heuristic that influences how 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 incremental adjustments based on additional information. These adjustments are usually insufficient, giving the initial anchor a great deal of influence over future assessments.

 

This form of Cognitive Bias is particularly relevant for strategists, management consultants and decision makers in general.


Compare with: Agenda Setting Theory  |  Confirmation Bias  |  Status Quo Bias


Anchoring Bias Forum

Anchoring Bias Special Interest Group


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Best Practices - Anchoring Bias Premium
  How to Avoid Anchoring in Strategic Decision Making?
Recently, Taleb and Nobel prize-winning psychologist Daniel Kahneman together explo...
     
 

Expert Tips - Anchoring Bias Premium
 

Generating New and Useful Ideas in Innovation: Avoiding the Primal Mark

In today's dynamic environment, to stay competitive continuous innovations and new ideas are important. For a creative idea to be successful, it has t...
Usage (application): Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Avoiding Anchoring
 
 
 

How to Avoid Being Misguided by Experience-based Biases

We often make decisions based on past experiences and judge the future. However, our past experience can sometimes misguide us since we refine and rei...
Usage (application): Analogical Strategic Reasoning, Decision-making, Cognitive Bias, Bandwagon Effect, Confirmation Bias, Anchoring
 
 
 

Do Sad or Happy People Make Better Decisions?

There is a common thought that being in a sad mood will result in a low degree of judgmental biases. For many judgmental biases this reasoning holds. ...
Usage (application): Decision Making, Negotiating
 
 
 

Three Types of Anchoring Bias

When talking about anchoring bias, three different types can be distinguished. These are outlined below:
1. Classic Type of Anchoring Bias...
Usage (application): Decision Making, Negotiating
 
 

Resources - Anchoring Bias Premium

Anchoring Bias In Depth: Experiments and Explanations

Presentation about the anchoring bias, with a lot of experiments that explain this bias. The presentation also aims to elaborate on the usage of ancho...
Usage (application): Anchoring Bias
 

How to Improve Strategic Decision Making?

In this video Michael Mauboussin, Credit Suisse's Head of Financial Strategies, briefly explains parts of Philip E. Tetlock's Model of 3 areas that ar...
Usage (application): Strategic Decision Making, Cognitive Bias, M&A, Corporate Finance
 

Full List of Cognitive Biases Classified into Four Different Areas

Presentation that classifies Cognitive Biases into four different areas, by S. Gupta (2011). It includes the following sections:
A. What are Cogn...
Usage (application): Decision Making, Human Behaviour, Management, Leadership, Strategy, etc.
 

Heuristics as Biases (defects) or Heuristics as Intelligence (beneficial)?

Presentation that mainly is about Heuristics as Biases and Heuristics as Intelligence, including the following sections:
0. Context
0.1 Rati...
Usage (application): Heuristics, Biases, Framing
 

Critical Thinking in Decision Making

Presentation about critical thinking for decision making, including the following sections:
1. Failure of Imagination
2. Untested Assumption...
Usage (application): Critical Thinking, Testing Assumptions, Avoiding Fallacies, Avoiding Biases, Dealing with Emotions
 

The Power of Persuasion: 3 Main Principles of Influencing Others

An extensive presentation about persuasion including many types and examples of persuasion experiements. The following sections are included:
1. ...
Usage (application): Persuasion Techniques, Managing Behavior, Cognitive Bias, Bounded Rationality, Resistance to Change
 
 

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