Group -4

For Effective Leadership

BUSTING ANCHORING BIAS
Section: B Group 4
Anchoring Bias - Definition
Anchoring Bias is one of the cognitive biases that states it is human’s nature to rely too heavily on
the first piece of information received (the “anchor”) when making decisions.
Anchoring Bias
Causes of Anchoring Bias
Anchoring-and-adjusting
Once an anchor is set, people adjust away from it to get to their final answer; however, they adjust insufficiently, resulting in their final
guess being closer to the anchor than it would be otherwise.

Selective Accessibility
● When given an anchor, a person ( a person making some judgment) will evaluate the hypothesis that the anchor thinks is a
suitable answer.

● Assuming it is not, the judge moves on to another guess, but not before accessing all the relevant attributes of the anchor itself.

● Then, when evaluating the new answer, the judge looks for ways in which it is similar to the anchor, resulting in the anchoring
effect.

Attitude change
Providing an anchor changes someone's attitudes to be more favorable to the particular attributes of that anchor, biasing future
answers to have similar characteristics as the anchor.
Influencing Factors
1. Mood
Sad people are more likely to use anchoring than people with happy or neutral mood.

2. Experience
While experience can sometimes reduce the effect, even experts are susceptible to anchoring.

3. Personality
People high in agreeableness and conscientiousness are more likely to be affected by anchoring, while those high in
extraversion are less likely to be affected.

4. Cognitive ability
It is highly contested. A recent study on willingness to pay for consumer goods found that anchoring decreased in those with
greater cognitive ability, though it did not disappear.
Overcoming Anchoring Bias while Decision Making

An anchor is such a powerful influence that only another anchor can overcome it. Re-anchoring replaces the number
in the head with one grounded in a different set of facts:

• Set some fact-based, non-historical criteria.

• Build and calibrate a forecasting model based on these criteria.

• Use the model as a second anchor

Conclusion

Before Taking decisions:

● Re-examine every problem from different perspectives.

● Explore whether are there any anchors existing unconsciously such as historical data.

● Make new decisions and open yourselves to new opportunities- Re-anchor.

Thank You