What Is Anchoring Bias? (Plus Effects, Ways and Tips)

By Indeed Editorial Team

Published 26 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Unconscious bias can affect an individual's expectations, decision-making and perception of events. Learning some examples of the many types of bias can help you identify when certain factors are influencing your thinking. Anchoring is a common bias that can affect your assumptions, opinions and choices. In this article, we discuss what anchoring bias is, explain when it occurs, share how to recognise instances of bias with helpful examples and provide a few tips for overcoming anchoring bias.

What is anchoring bias?

Anchoring bias, also called focusing illusion, is a cognitive bias that causes you to rely too heavily on the first piece of information you're given about a topic. When you're making estimates or setting plans about something, you interpret newer information from the reference point of your anchor, rather than seeing it objectively. This can skew your judgement and prevent you from updating your predictions or plans.

For example, when reviewing potential candidates, the first CV a hiring manager sees might show the candidate has a master's degree from a well-known university. Even if the job doesn't require a master's degree, the hiring manager might use the first candidate's CV as an anchor for reviewing the others. Anchoring can also occur during negotiations. The person who says the first offer can set an anchor that influences the other person's offer.

Why does anchoring bias occur?

Here are a few working theories about why anchoring occurs:

Mood

Some studies revealed that mood can affect your tendency to give added significance to anchoring information. Individuals who are in angry or sad moods seem to rely more heavily on anchors than those who are in cheerful moods. These findings contrast with results from other types of bias because, most often, other types of logical fallacies occur when people are happier.

The anchor-and-adjust hypothesis

The anchor-and-adjust hypothesis claims that when you're uncertain about a decision, you use an initial value as the basis of your future judgements. The downside of this is that, often, your adjustments may rely too strongly on the leading value. Your judgements may rarely make significant enough departures from your leading point of reference.

The selective accessibility theory

Another theory says anchoring emerges because the anchor primes you to notice and believe information that supports your initial perception of a subject. You're more likely to accept or remember details that reinforce the anchor. This can cause skewed perceptions and error-prone decision making.

Effects of anchoring

Anchoring can lead to several effects, and not all of them are negative. It's okay to use existing information to make a tough decision or establish an opinion. Anchors can help you form a reasonable estimate. When the anchor value, though, doesn't actually relate to the topic or represent reality accurately, it can affect your ability to arrive at sound conclusions.

Here are a few potential effects of anchoring:

It can influence your salary negotiations

Imagine you're trying to negotiate a salary increase with your employer. You may hesitate to make an initial offer, but being the first one to give an offer might actually be the best way to go. Whoever makes that first offer might have an advantage, as the anchoring effect might make that number the starting point for all further negotiations. Not only that, it may bias those negotiations in your favour. That first offer can help create a range of acceptable counteroffers, and any future offers might use that initial number as an anchor or focal point.

Related: 10 Important Negotiation Skills: Examples and Tips

It can skew your expectations

Anchoring can skew your expectations. It can happen because of the meaning you attach to certain values. For instance, if you're asked to guess the multiplied value of a set of numbers with only a few seconds to view them, you may guess that the answer to 16 x 12 x 9 x 5 is higher than the answer to 5 x 9 x 12 x 16, even though the actual total is the same. This happens because the starting number in the series can act as an anchor that skews your expectations.

Related: 10 Important Negotiation Skills: Examples and Tips

It can lead to poor decision-making

Anchoring can cause poor decision-making. When you rely too heavily on a single piece of information, especially if that piece of information doesn't represent a situation accurately, it can lead to uninformed decisions. Your tendency to accept the first piece of information you learn or hear can skew your perception and cause you to rely disproportionately on the knowledge you already have. When this knowledge is wrong or misrepresented, it can affect your ability to make sound choices.

Related: Enhance Your Decision-Making With Deductive Reasoning

It may lead to the dismissal of new information

Another potential effect of anchoring is that you're often more likely to accept information that supports an anchor. If you encounter conflicting information later, you might not give it as much credibility as you did your initial idea. This can restrict your ability to hear information objectively. For instance, if you estimate how much energy and time is necessary to complete a task and then later discover your estimate was too low, you might feel reticent to adjust your expectations even once you realise those expectations are illogical.

Ways to identify anchoring

Learning ways to identify instances of anchoring can help you stay conscious of its effects. Because anchoring is so pervasive, it can affect a lot of the decisions and thoughts you form. Here are a few ways you can identify examples of bias:

Disregarding conflicting facts

One theory of anchoring asserts that anchors prime you to react in specific ways to new information. If something supports your initial understanding, you might be more willing to believe the new information. If it doesn't support your anchor, you might not give as much credit to the new information.

Related: Research Skills: Definition, Benefits and How to Develop

Relying on a single source of information

You may notice anchoring occurring when you use only a single point of information to inform your decisions. For example, if you're shopping for a used car, you might see a car for sale for $13,000. If the next car you see is only $9,000, you might view this car as cheap, regardless of its actual value. This means that you relied heavily on the initial price of the vehicle rather than on the average value of a specific type of car. If a single idea or point is the lone source of your conclusions, you may experience anchoring.

Being reluctant to accept new ideas

Sometimes anchoring makes it challenging to move away from an idea or assumption, even if new information shows the illogicality of the initial idea. If you're a home builder, for example, you might not accept that material prices are double your estimate because you may feel attached to the initial price you imagined for a project. Even if prices increase or some other factor is impacting material supply, you might not want to accept the change to your initial understanding of a situation.

Tips for reducing anchoring

Anchoring happens to everyone, even if they're aware it's happening. Still, noticing the existence of this bias can help you identify instances of it happening so you can take steps to prevent some of its effects. Here are a few tips for reducing anchoring:

Assess your reasoning

When you arrive at a new conclusion, consider asking yourself how you came to that conclusion. By analysing your own thinking, you may identify instances of anchoring. If you find your reasoning for a decision or thought has a weak foundation, consider taking steps to improve your information and make a stronger argument for your belief or decision.

Related: Inductive Reasoning: Definition, Process and Examples

Use multiple sources

One way to reduce anchoring is to gather more information. Gathering knowledge can help you make informed decisions based on reality rather than an unsubstantial anchoring fact. For instance, if you're browsing a furniture shop's website, you may notice a sofa for sale that originally cost $4,000. The shop may say they marked the sofa down from its original price and it now only costs $2,000.

Anchoring can make you think the new price is a great deal. Having further research, though, may reveal similar sofas are available from other shops for an even lower amount. By pausing in your decision-making and waiting until you have more facts, you can make more informed choices.

Ask for a second opinion

If you think you've used anchoring, consider asking someone else for their opinion. Try not to share your estimate or thinking, as this can influence anchoring in the other person. Instead, listen to their reasoning and evaluate it against your own.

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