Anchoringand-adjustment heuristic guides estimations from "summary" of Thinking, Fast and Slow... in 30 Minutes by 30 Minute Expert Summary Staff
When making estimations, people often rely on a mental shortcut known as the anchoring-and-adjustment heuristic. This heuristic involves starting with an initial value, or anchor, and then adjusting that value based on additional information to reach a final estimate. The anchor serves as a reference point that influences subsequent judgments, even if it is completely irrelevant or arbitrary. Once the anchor is set, individuals tend to insufficiently adjust away from it, leading to biased estimations. Studies have shown that people tend to adjust their estimates insufficiently, regardless of the accuracy of the anchor. This tendency to stick too closely to the initial value can result in inaccurate judgments and decisions. The anchoring-and-adjustment heuristic can be seen in various real-world scenarios, such as negotiations and pricing. For example, when negotiating the price of a car, the initial asking price set by the seller can serve as an anchor that influences the final agreed-upon price. Similarly, when pricing a product or service, businesses may use anchoring techniques to influence consumers' perceptions of value.- The anchoring-and-adjustment heuristic highlights the cognitive bias that individuals face when making estimations. By understanding this phenomenon, people can become more aware of their tendency to rely on anchors and make more accurate judgments and decisions.
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