Anchoring And Adjustment
Anchoring and adjustment is a phenomenon wherein an individual bases their initial ideas and responses on one point of information and makes changes driven by that starting point. The anchoring and adjustment heuristic describes cases in which a person uses a specific target number or value as a starting point, known as an anchor, and subsequently adjusts that information until an acceptable value is reached over time. Often, those adjustments are inadequate and remain too close to the original anchor, which is a problem when the anchor is very different from the true answer.
Definition: Anchoring and adjustment refer to the phenomenon where individuals base their initial opinions and reactions on a specific piece of information and then make adjustments from that starting point. The anchoring and adjustment heuristic describes how individuals use a specific target number or value as a starting point (the anchor) and then adjust that information over time until they reach an acceptable value. Typically, these adjustments are insufficient and remain too close to the original anchor, which becomes problematic when the anchor is significantly different from the true answer.
Origin: The concept of anchoring and adjustment was first introduced by psychologists Amos Tversky and Daniel Kahneman in 1974. Through a series of experiments, they discovered that people often rely on initial information (anchors) when making judgments, even if that information is irrelevant to the final decision.
Categories and Characteristics: Anchoring and adjustment can be divided into two categories: 1. External Anchoring: Anchoring triggered by external information or cues, such as market prices, expert opinions, etc. 2. Internal Anchoring: Anchoring triggered by an individual's own experiences or memories. Characteristics include: 1. Significant Initial Anchor Influence: The initial anchor has a significant impact on the final decision. 2. Insufficient Adjustment: Individuals often make insufficient adjustments, resulting in final outcomes that remain close to the anchor.
Specific Cases: 1. Stock Valuation: Investors may use the current market price of a stock as an anchor when valuing it, even if that price may be overvalued or undervalued. 2. Real Estate Pricing: Buyers may use the initial asking price provided by the seller as an anchor when purchasing real estate, even if that price may be unreasonable.
Common Questions: 1. How to avoid the anchoring effect? Obtain information from multiple perspectives to avoid relying on a single source. 2. Is the anchoring effect always negative? Not necessarily; sometimes anchors can provide useful references, but they should be used cautiously.
