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.
