Have you heard the saying, “The first impression is the last impression”? In psychology, anchoring bias is a similar concept. When we hear, read or see something for the first time, we subconsciously anchor or latch on to a perception about it.
Here’s an example:
If you find out something that negates your perception of your favorite author or sportsperson, your first reaction would likely be to reject it.
We form biases every day based on our past experiences, our upbringing, our social circle, what we learn in school, where we work and who we work with. Each interaction influences our perception of things, situations and people.
When it comes to curbing biases, the biggest challenge is identifying the difference between opinions and facts. Here, we’ll discuss the meaning of anchoring bias and some ways to tackle the anchoring effect so that you can evaluate situations more objectively.
What Is An Anchoring Bias?
Psychologists Amos Tversky and Daniel Kahneman first formalized anchoring psychology as a cognitive bias that affects the way we intuitively understand information. We rely on the information we access above everything else. For instance, if someone tells you that they topped their board examinations, you may believe that they are very intelligent–even though this may not be true.
Let’s look at some examples of anchoring bias:
Say that you go to the store to buy a pair of trousers. You spot two pairs of trousers. One is very expensive and the other is cheaper. You’re likely to think the second one is more affordable when, in fact, it may be costlier than many other options. Think about seasonal sales. We naturally believe that something is worth buying if it’s marked down from its original cost.
When we meet someone new, we often form an opinion about them based on what they’re wearing and the way they talk. Preconceived ideas and opinions often act as a roadblock in decision-making because they affect the way we perceive a person. If you believe that your team is incapable of coming up with fresh ideas, you’ll dismiss their suggestions without considering their potential.
Anchoring bias is based on preexisting information and can influence all subsequent decisions.
How Does Anchoring Psychology Impact Your Life?
Whether you’re going to watch a movie, interacting with your colleagues or buying a new bag, every decision you make is based on existing ideas. This is particularly relevant in a professional setting because anchoring bias plays a critical role in decision-making.
A common workplace situation impacted by anchoring bias is the hiring process. Say that your organization evaluates candidates based on their international education. In such a case, you might miss out on a star candidate because they studied at a local university. It’s important to approach your hiring criteria objectively to ensure you have a diverse workforce.
You’ll also observe the anchoring effect during salary negotiations. If you really want a job and the talent acquisition manager quotes a figure right in the beginning, you’ll likely go with that number, even if it’s lower than you anticipated. This is because the original figure is now the anchor in your mind. Unknowingly, you latched on to the first piece of information you got, ignoring everything else.
There are situations where the anchoring basis may also prove to be beneficial. This is when you have to make decisions with limited information within a short time frame. In such cases, people who struggle with decision-making find it easier to go with the most probable option. For example, if you have to propose a budget for a new project, you could review the cost of similar projects and propose a number based on them.
Make Informed Decisions
Anchoring psychology can stall our personal and professional growth. It limits our knowledge and beliefs. Being open-minded and accepting different perspectives is important to avoid the anchoring effect.
Harappa Education’s Reasoning Logically course will teach you how to evaluate a given set of information to make informed decisions. Designed for workplace impact, this course shows you how to look at a situation objectively, solve problems with a clear head and gather information from diverse sources. Don’t let your anchoring bias make decisions for you. Instead, focus on what you don’t know and welcome different opinions to become an effective decision-maker!
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