A Demonstration of the Anchoring Effect

Abstract

To guess is inexpensive; to guess wrong can be very costly. Ancient Chinese proverb. In this teaching brief, we describe a technique for demonstrating how cognitive heuristics subtly (and sometimes perniciously) affect decision making. More specifically, we describe a method for illustrating the anchoring effect. Awareness of this effect is, logically, the first step toward obviating and/or removing the potential biases that may result from basing decisions on unreliable/irrelevant information. Cognitive heuristics are mental mechanisms used to cope with the uncertainty and complexity of the decision-making environment (Bazerman, 2002). By reducing the amount of information taken into consideration, heuristics simplify and speed up the decision-making process (Schwenk, 1986). But the heuristics employed can have negative consequences, resulting in suboptimal decisions.