What is Anchoring and Why Should You Care?
Introducing anchoring — a crucial mental model from the discipline of psychology that is very relevant in your professional life, but also your personal life. Once you’re familiar with this one, you might just start to notice it everywhere! ⚓
What is Anchoring?
Anchoring is a cognitive bias that describes the tendency for an individual to rely too heavily on an initial piece of information offered (known as the “anchor”) when making decisions.
So what does that mean in practice? There’s one study I like in particular that illustrates the phenomenon of anchoring quite nicely.
The Gandhi Anchoring Study
Researchers split a bunch of people into two groups, and then asked them to estimate the age of the the famous activist Mahatma Gandhi. Each group was asked the question in a different way (or with a different anchor.)
The first group were asked: “Did Gandhi die before or after the age of 9?”.
This groups average answer was 50 years old.
The second group were asked: “Did Gandhi die before or after the age of 140?”.
This groups average answer was 67 years old.
Even though the anchor age numbers were outrageously high and low, the two groups still guessed significantly differently. The different ways the question was asked significantly affected their answers!
Anchoring And Pricing
Retailers love to use anchoring to affect a consumers reaction to their prices. See these two price tags below… Which of these appears to be a more appealing purchase?
Most of us will find it fairly easy to be objective about the price tag on the left, but less so with the price tag on the right. We get anchored by the $1000, and in comparison the $300 seems like a great deal doesn’t it?!
Want to go deeper?
🎦 Watch this video of Steve Jobs introducing the iPad for an absolutely masterful display of anchoring! Watch from this point in particular — where he anchors the audience with $999, and then see what he does next…
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