Have you ever been happy with a significant discount but then realized that the price of the same item in the market was lower than the discounted price? If your answer is yes, then you have an anchoring error. The anchoring effect occurs when we make quick decisions or judgments based on the same initial information. After defining this cognitive error with an example in this article, we examine its consequences and prevention methods.
What is the anchoring error?
The anchoring effect or error is a psychological phenomenon that causes people to pay the most attention to the first data and information they receive when facing a problem. This first received data is so vital that it may affect the decision-making process. To better understand this phenomenon, consider the following examples:
- If the home seller offers a high price first and then lowers it slightly, you may think you have reached a reasonable price, even though the house’s price is still higher than the market norm.
- In negotiations, the person who makes the first offer usually has a more critical role in determining the outcome of the talks. For example, if the employer makes an offer lower than you expected in a job interview and then increases it slightly, you may be convinced to accept it, even though it is still lower than your desired salary.
- When watching or reading the news or browsing cyberspace, we may find a wrong and inappropriate judgment about a topic by seeing the first headlines or posts about it and continue to judge it the same way we have encountered it for the first time.
- If you watched a lot of TV as a child, how many hours a day do you allow your child to watch now? Probably longer than the duration of other children!
- A less experienced doctor may judge the disease and its follow-up process based on your first sentences and the history you give without looking at other aspects.
- A teacher may make premature judgments about a student’s educational or educational status based on his first encounter. Students also judge their teacher’s literacy or other qualities based on the first day of class.
- Even random numbers may affect our judgment and estimation power. In a research, a group of participants chose random numbers by spinning a wheel from 0 to 100. They were then asked to guess the number of African countries members of the United Nations, and the guesses were close to the random numbers the subjects chose.
Does the anchoring error have any consequences?
Can you see the possible outcomes in the examples we gave? Although the consequences of each case must be considered separately, research shows that the anchoring error has the most damaging consequences for our mental health and financial situation.
Mental health and financial status
Sometimes, the anchoring error creates unrealistic expectations in us. These false expectations can increase our dissatisfaction and stress. For example, if someone overestimates their abilities based on a wrong upbringing or feedback received from others, they will make bad choices and actions in the workplace or other aspects of life. When the results do not match the expectations, the person becomes disappointed.
On the other hand, anchoring can lead to feelings of helplessness and being trapped. If someone regularly falls into the trap of this phenomenon and makes wrong decisions, he enters paths from which it may not be possible to return quickly. In the example of a job interview, if you accept a lower salary than you deserve due to this cognitive error, you will have to start your job with the same salary. All this, along with possible adverse financial effects, may lead to feelings of helplessness and even depression.
How can the impact of anchoring errors be reduced?
The anchoring error is a cognitive error that can happen to anyone. So, no one can claim to be immune from it. It can be prevented, and its effect is reduced only with awareness. Do you know how this knowledge is formed?
1. See other angles of the case
Gather all available data on a subject before making a decision. Do not exclude any source; try to find a holistic view of the subject. Although sometimes you have to make a quick decision at the moment, such situations are rare.
2. Challenge initial estimates
The first data you receive may cause an anchor cognitive error. Consciously challenge it in your mind. Don’t let the same initial experience or information shape your opinion about an issue. Doubting the first data paves the way for further investigation.
3. Take notes
We make quick decisions in our minds. Writing allows us to take a deeper look at the problem. Writing allows us to reflect. So, don’t stop writing data and trends that lead to decision-making.
4. Get advice from others
Other people’s views of a subject can always clarify new points for us, Points that we ignored before. Seeking advice from others is like looking at a problem from their point of view. By gathering the opinions of others, we use their thinking power to solve the problem.
5. Don’t make decisions when different emotions arise
According to research, our ability to think logically decreases when we are excited. These positive (e.g., joy and excitement) and negative (e.g., sadness and anger) involve our minds so much that they leave no room for critical and logical thinking. So, deciding when we are in a stable emotional state is better.
6. Use problem-solving methods
Experts and consultants in each field have designed different methods to solve problems. These methods are often designed to reduce human cognitive errors when making decisions. Problem-solving skills can be learned. Learn it and apply its principles.
7. Read about human cognitive errors
Scientists in psychology and logic have categorized a set of human cognitive errors. You can learn about these errors by referring to reliable written and non-written sources, and as a result, you will be less likely to fall into their trap.
A practical example to deal with anchoring error
Consider the example of a job interview. Now that you are familiar with this cognitive error, you know that before interviewing and bargaining for salary, you must first research the legal structure of the job in question to find out about the salary range of that job. Then, during the negotiation, determine a range of the requested salary instead of stating a number. If the interviewer insists, you can announce the final number (acceptable salary floor for you) you decided on earlier.
Your experiences
What is your experience with anchoring errors? Have you ever made a wrong decision about this phenomenon? How do you think this error can be dealt with? Please share your thoughts with us and the readers.
Warning! This article is only for educational purposes; you should consult a doctor or specialist to use it.
