Anchoring Bias

In psychology, there is a term called anchoring bias where we are likely to make judgments and decisions based on an initial piece of information, which is the “anchor.”

A real-life example of anchoring bias is when we see a car that costs a specific amount - then we see a second car that costs cheaper than the first car, we are prone to choose the second option.

This means that, in this situation, the initial cost of the car could set the standard of the negotiated price.

In other words, any price lower than the initial one seems like a better deal, even if it may be higher than the actual value of the car.

https://thedecisionlab.com/biases/anchoring-bias

We tend to believe the information that is given to us in the first place and rely on that information when making decisions, even though the information might be wrong.

Anchoring bias hinders our ability to use rational thinking skills that are crucial for making sound decisions. Hence, anchoring bias can be avoided by personal training, where we do research with different sources and also take a moment to think carefully about what decision we should be making.