Anchoring Bias

In the decision making process, anchors occur when individuals use initial information for subsequent judgment. Once the anchor point is set, other decisions are made by adjusting away from the anchor point and other information around the anchor point is biased.

For example, the initial price of a used car sets the standard of the remaining negotiations, so the price below the initial price looks more reasonable even if it is higher than the actual price of the car.

The study showed that fixing is very difficult to avoid. For example, in one study, students were obviously given the wrong anchor. They asked if Mahatma Gandhi died before or after 9 years of age, or whether he died around 140 years old. Clearly, these two anchors are not correct, but the guesses still differ in the two groups (average age is 50 years, average age is 67 years).

If you want to use an anchor, please pay attention to the target audience. Individuals with higher cognitive abilities have a weaker fixation effect (Bergman et al., 2010) and those who purchase the product you are selling have (Alevy et al., 2011).

Do not set the anchor price too high. Otherwise, of course, other options for this product tend to be fixed. Basically, please compare reality with other things you are selling, please keep the reality.

Please carefully consider how to set product range and price. People will fix whether you want them to do this

Anchor bias means that it tends to depend too much on the first information provided in making the decision or the information to be preferred. Anchoring deviation is especially common when numerical values ​​are involved. This is where ICO evaluation is particularly harmful. Suppose you access the ICO calendar site with a rating system from 1 to 10. 1 is a "very dangerous" ICO, and 10 is a "very secure" ICO. To convince ICO if you look at the future ICO with 10 ratings is a dangerous investment that would be difficult to convince more than those who have never actually seen the evaluation. Stagnated prejudice is stubborn, showing ugly faces everywhere.

In the context of investment, anchor biased market participants tend to hold investments that have lost value in order to revise the fair value estimate at the original price rather than fundamentals. Therefore, market participants will bear greater risk by holding investment and hope securities will be able to resume their purchase price. Market participants will understand that the anchor is not perfect, and will try to adjust to reflect subsequent information and analysis. However, these adjustments usually result in results reflecting the bias of the original anchor.

The bias of the anchor is a possibility that participants in financial markets (such as financial analysts and investors) may dismiss reasonable financial decisions, such as purchase of underestimated investment or sale of overvalued investment there is. Fixed bias can also make financial decisions that are not ideal, such as investors ignoring underestimated investments or holding overvalued investments. Anchor bias can occur anywhere in the financial decision-making process, from key forecast inputs (such as sales volume and commodity price) to final output (cash flow, securities prices, etc.).

There is a cognitive bias that may affect your decision. When asked which bias is most interesting, Finimizer Lucy chose "anchor bias". Essentially this bias touches us about how we are influenced by higher numbers and lower numbers and reacts differently to each number. She used to be a teacher, and she often observed this. Anna asked how she thought more about her decision than to take an intuitive and intuitive response at once. Her company is in a round of recruitment and she encourages her team to pay more attention to the numbers behind each applicant, analysis and statistics and their emotional reactions.