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Quantitative Research: The Heuristic Bias of Anchoring-and-Adjustment

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Module
Research Into Human Behaviour (4007PY)

Institution
Coventry University (West Midlands) (CU)

ASSIGNMENT TYPE: coursework *quantitative research paper on secondary data Overall grade = 72% Design: correlational design used to examine the relationship of an arbitrary ‘anchor’ and the maximum amount of money they would be willing to bid for a keyboard.

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Uploaded on March 21, 2024
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Abstract

Title: How do we make decisions? The Heuristic Bias of Anchoring-and-Adjustment

Objectives: Individuals tend to use a frame of reference (an ‘anchor’) to estimate the value of

something and adjust above or below that value. Therefore, the purpose of the study was to

examine the relationship of an arbitrary ‘anchor’ and the maximum amount of money they

would be willing to bid for a keyboard.

Design: A correlational design

Method: Following the ethical procedure, all voluntary participants (N=206) were asked to

write down the last two digits of their mobile number – this acts as the arbitrary ‘anchor’.

Then participants were asked to write down the maximum amount of money they would be

willing to bid.

Results: Findings showed a statistically significant, weak positive correlation between the

arbitrary ‘anchor’ and the maximum amount of bid made for the keyboard. Therefore, the

higher the last two digits of a mobile number, the higher the bid an individual is willing to

make.

Conclusions: Findings suggest that anchors are likely to influence people’s judgement when

making decisions – even for arbitrary values. Therefore, anchoring can be used when

negotiating with others or opening an offer, such as: in auctions, real estate or donating.

Introduction:

, How do we make decisions? When deciding, individuals will make cognitive short-

cuts to decide quickly due to cognitive time restraints (Furnham and Boo, 2011). This is

called heuristics and can lead to biases as decisions are made through unconscious

knowledge. Therefore, individuals will rely on the available information and can even be

influenced by arbitrary factors when making decisions (Ariely et al., 2003).

A common heuristic is the anchoring bias, in which individuals tend to estimate things

by using a frame of reference. Individuals use these anchors as a substitute value to simplify a

complicated judgement (Epley and Gilovich, 2006). The anchoring-and-adjustment heuristic

was first introduced by Tversky and Kahneman (1974). In his experiment, a wheel was spun

and the number it landed on acted as the anchor, in which participants had to estimate

whether the number of African nations in the United Nations was greater or less than the

anchor. As a result, participants with a greater value estimated higher than those with a low

anchor value. In addition, they proposed that the estimated value can be adjusted up or down,

but never enough (Epley and Gilovich, 2006; Tversky and Kahneman, 1974) and is often

over or underestimated (Epley and Gilovich, 2006).

Epley and Gilovich (2006) indicated that anchoring biases can be reduced when

individuals are more motivated to engage in the effortful process, as people invest more

mental effort when they want to be accurate (Lieder et al., 2017). Adjustments may be

affected by factors that reduce one’s cognitive ability to a task (Langeborg and Eriksson,

2016), such as lacking the willingness or motivation to be accurate. Although, Epley and

Gilovich (2005) and Langeborg and Eriksson (2016) found that adjustment only occurred in

self-generating anchors, rather than when the anchors are provided by others. Furthermore,

Wilson et al. (1996) argues that if an individual is knowledgeable about the quantity, it will

reduce the effects of the anchoring bias.

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