Heuristics: Anchoring

Heuristics? What the heck is that? Here’s Wiki’s short definition:

heuristics are strategies using readily accessible, though loosely applicable, information to control problem solving in human beings and machines

Heuristics gets deep and challenging fast, but I want to talk about one theorized heuristics specifically: anchoring.

As humans, we receive a number of different manipulation tactics. It’s inherent and natural to take as much we can because we’re greedy beings. Anchoring a great way that salesman and business use to affect and access probabilities. Anchoring is the concept where we form cognitive bias towards an anchor (usually a value or piece of information) when we make decisions. Here’s a quick example and research study executed by Amos Tversky and Daniel Kahneman:

The anchoring and adjustment heuristic was first theorized by Amos Tversky and Daniel Kahneman. In one of their first studies, the two showed that when asked to guess the percentage of African nations that are members of the United Nations, people who were first asked “Was it more or less than 10%?” guessed lower values (25% on average) than those who had been asked if it was more or less than 65% (45% on average).[3] The pattern has held in other experiments for a wide variety of different subjects of estimation.

People were anchored by the number in their question. This ultimately resulted in an influence of their answer.

Another example where people use anchoring is when homes and cars are sold. A Realtor tells a homeowner that his property is valued between $300,000 to $400,000. When the home sells for $385,000 the homeowner will be pleased. But say the Realtor says the home is worth $350,000 to $450,000. If that same offer, $385,000 was offered, the homeowner would be less inclined to sell because he’s anchored by a different value.

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