Thinking Fast and Slow - Study Notes - Version 2: 11

Chapter 11: Anchors

anchoring effect: before estimating a value, consider some other value, then estimates rfemain close to considered value — very reliable finding — e.g asked whether Gandhi was more than 114 years old when he died à much higher est. of age at death than if anchoring question was 35 — e.g. asking price of a house infl’s your offer, seems more valuable
any number considered as a poss. sol’n to estim’n probl. induces anchoring effect — even totally irrelev. number, e.g. spin wheel of fortune
2 kinds of anchoring —

adjust-and-anchor heuristic, to est. uncertain quantities — start fr. anchoring number, assess whether too high/ low, grad’ly adjust estimate “moving” fr. anchor — a deliberate S2 adjust’t fr. an anchor
usually people stop too early, at near edge of region of uncertainy, insufficient adjust’t — e.g. child turning down vol. of music, but not enough, drive too fast after coming off highway
we adjust less (stay closer to anchor) when tired or busy — adjust’t is effortful
we use an anchor to start w. q. such as What is the boiling temp of water at the top of Mt Everest?

but adjust’t is not the whole story of anchoring
priming is another kind of anchoring, suggestive — e.g. Was Gandhi more or less than 144 years old when he died? How old when he died? — S1 “believes” sentence in order to underst. it à activates assoc’ns, compatible ideas, S1 tries to construct a world in wh. anchor number is true
this is associative coherence — e.g. avg price of cars, a high anchor primed people to be more receptive to names of luxury cars

anchoring can be measured — avg. low estim. / avg high estim. (as %) — 100% when estim. = anchor, 0% for when estim. has relation to anchor
e.g. fine-art auction “estimates,” real estate asking price, suggested donations
anchors work even when the number is random — e.g. judges roll dice before giving sentence

anchoring effects are everywhere — e.g. only 6 per customer
we are v. suggestible
countering the anchoring effect — if confronted w. outrageous offer in negotiations, refuse to continue until outr. number is withdrawn — or invoke S2, “think the opposite,” minimal offer opponent will accept, costs to opponent of failure to reach agree’t

we makes jud’ts & choices based on memory, wh. comes fr. S1 à bias, anchors based on info easy to retrieve, WYSIATI
are aware of anchor, but not aware of how it guides & constrains you — unable to imagine own thinking w/o anchor or if anchor was diff. — shd assume any number in envir’t has anchoring effect — cf. priming research, thoughts & behavior infl’d by current envir’t, much more than we know or want

“The firm we want to acquire sent us their business plan, with the revenue they expect. We shouldn’t let that number influence our thinking. Set it aside.”
“Plans are best-case scenarios. Let’s avoid anchoring on plans when we forecast actual outcomes. Thinking about ways the plan could go wrong is one way to do it.”
“Our aim in the negotiation is to get them anchored on this number.”
“The defendant’s lawyers put in a frivolous reference in which they mentioned a ridiculously low amount of damages, and they got the judge anchored on it!”