Why the First Piece of Information We Hear Influences All Our Future Decisions? — Here’s What Researchers Discovered About the Anchoring Effect in Early Humans

Have you ever heard the price of an item for the first time, and then compared the prices of other items to it, even though they may not be the same products? Or have you ever heard from a friend that a specific movie was bad, and while watching it, you notice more of the bad parts of the movie? These two experiences are just a simple example of how the first piece of information we hear could affect our future decisions or judgments.

This is a phenomenon commonly known as the anchoring effect. It is the thinking habit of our brains to grab onto the first idea or first number we see, and then use it as the basis for later course of actions. Even if we try to be balanced and fair, we usually still end up using that initial information as our anchor, but why do we do that? Does every single person have this habit? Let’s discuss further what the anchoring effect is and how it could influence our lives.

What Is the Anchoring Effect?

The anchoring effect refers to our minds’ tendency to rely on the first number, fact, or concept we hear, to the point that this idea becomes the anchor to which we compare all future new information. Instead of deciding based on looking at each new piece on its own, our brains usually weigh it up against the initial data we have gathered.

One of the best examples of this phenomenon being used by people was in marketing, where vendors often show the original price first and then the discounted price after a certain product or service.

Let’s say a piece of clothing was originally priced at $100, then this price was crossed out, and the next price says it is now only $60. Our brains may work by using the first piece of information, which is the original $100, as the anchor, making it seem like the discount is a huge bargain that will be a waste to pass up on, even if similar items could maybe be sold in other stores for only $50 or something lower.

This is just one example, but let’s explore a few more about how this cognitive bias affects our daily lives, and not only in bargaining to buy a great piece of clothing cheaply.

Read more: TheDecisionLab

How Anchors Shape Our Everyday Choices

The Anchoring Bias: Why The First Offer Matters

The anchoring effect is present in a lot of negotiations and decisions we make where we first hear an initial information, before completely determining a conclusive action. For example, when we interview for our jobs and try to negotiate our salaries, you or the employer may give a number. Then the next salary suggestion or offer would now be compared to this data.

If you try to suggest a number that is a lot higher than the original, it may seem unreasonable, so you may end up negotiating a salary that is a lot closer to that number, even if you know that you deserve more. The point is that the first number is now a strong anchor for the entire negotiation. This initial data point could heavily influence what the final number would be.

The same goes if the first offer is very high or very low. The whole conversation may end up with just staying near or in the range of this number. This phenomenon also happens not only in haggling about salary, but also in other aspects of our lives, like buying or selling a piece of real estate, and other forms of negotiations. But why exactly does our brain cling so much to this first number or information? Is it natural to all or most humans?

Why Our Brains Cling to the First Number We Hear

So, why do our brains grab onto the first piece of information that we receive and use it as a basis for our future decisions? Scientists found that there may be a few possible reasons or theories that could explain this anchoring effect.

The first one is that our brain could be wanting to conserve energy and time. Every day, there’s a lot of information that our mind absorbs and evaluate. So, when it comes to decision-making, it may take a lot of resources to gather all the information to form a new conclusion, instead of just relying more on an existing one and slightly adjusting it. This could be a natural phenomenon caused by our brains’ tendency to try to be as efficient as possible and conserve their energy.

Another theory would be the anchor and adjust hypothesis. This idea refers to when we are faced with uncertainty, the first data point could serve as the starting point, where we then move up or down. However, people may often adjust too little because this adjustment would have taken a conscious mental effort and heavier loads on our brains. This could result in our final answers being pulled much closer to the initial data, even if that first information could be random or even irrelevant.

Additionally, during uncertain conditions, getting a piece of data could give us a sense of safety and familiarity. We may end up trusting that first information if we do not have any background knowledge. These thinking habits could have some negative effects, and acknowledging our cognitive bias may be the first step towards protection from their impacts on our lives.

Read more: SimplyPsychology

Possible Evolutionary Reasons Behind the Anchoring Effect

CRITICAL THINKING - Cognitive Biases: Anchoring [HD]

There are some possible theories for why the anchoring effect cognitive bias developed in our brains. Long ago, early humans did not have access to as much information as we do today. So, people often need to make fast and quick decisions, more often with just the first data that they have seen or heard.

For example, if one person in the tribe were to encounter an animal and thought that it was dangerous, it may be safer for the other individuals to also anchor to that thought that the animal is dangerous. It is because the cost of being wrong and not relying on that first information to evaluate is much costly, and may end up threatening their survival.

Anchoring could have also given early humans a sense of certainty in a world full of uncertainties. When they faced unknown situations, like whether a food is edible or could be poisonous, or which path is the safest to take, having at least that anchor information may be beneficial. Using that initial data as the starting point, then making small adjustments could be easier than facing the unknown with literally no background information.

Today, we no longer live in the same dangerous world that our ancestors lived in, but this cognitive bias that may have once helped them survive could have been passed down to us. This could be why the first piece of information we receive still has such a strong influence on our future decisions on the matter.

Author's Final Thoughts

The anchoring effect is a cognitive bias that most people have because it is a natural and common thinking habit of our brains. It stems from our minds wanting to perform as efficiently as possible. This could have some biological and evolutionary reasons, but the point is that it wants to have a mental shortcut, quickly process the information, and then make a decision.

Most of the time, we do not notice it happening in our lives, because it could feel like we are just using our intuition, when in reality our brains are exercising a cognitive bias. However, once we understand this phenomenon, we can then question the existence of the anchor and try to decide for ourselves.

Read next: Why Do We Believe Information That Confirms What We Already Think? — Here’s What Scientists Found About Confirmation Bias

References & Further Reading

Epley, N., & Gilovich, T. (2001). Putting adjustment back in the anchoring and adjustment heuristic: Differential processing of self-generated and experimenter-provided anchors. Psychological Science. https://doi.org/10.1111/1467-9280.00372

Epley, N., & Gilovich, T. (2006). The anchoring-and-adjustment heuristic: Why the adjustments are insufficient. Psychological Science. https://doi.org/10.1111/j.1467-9280.2006.01704.x

Furnham, A., & Boo, H. C. (2011). A literature review of the anchoring effect. The Journal of Socio-Economics. https://doi.org/10.1016/j.socec.2010.10.008

Chapman, G. B., & Johnson, E. J. (1999). Anchoring, activation, and the construction of values. Organizational Behavior and Human Decision Processes. https://doi.org/10.1006/obhd.1999.2841

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science. https://doi.org/10.1126/science.185.4157.1124