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    Anchoring Bias in Decisions

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    mandeep sh
    Anchoring bias is a cognitive bias where people rely too heavily on the first piece of information, or "anchor", when making decisions. Once an initial anchor is set, people have difficulty adjusting away from it sufficiently, resulting in final guesses that are closer to the anchor. Anchoring bias can be overcome by re-anchoring - replacing the initial anchor with a new anchor grounded in different facts, such as criteria-based forecasts. To avoid anchoring bias, decision makers should re-examine problems from different perspectives, identify any unconscious anchors like historical data, and make new decisions open to re-anchoring based on different information.

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    Anchoring Bias in Decisions

    Uploaded by

    mandeep sh
    182 views9 pages
    Anchoring bias is a cognitive bias where people rely too heavily on the first piece of information, or "anchor", when making decisions. Once an initial anchor is set, people have difficulty adjusting away from it sufficiently, resulting in final guesses that are closer to the anchor. Anchoring bias can be overcome by re-anchoring - replacing the initial anchor with a new anchor grounded in different facts, such as criteria-based forecasts. To avoid anchoring bias, decision makers should re-examine problems from different perspectives, identify any unconscious anchors like historical data, and make new decisions open to re-anchoring based on different information.

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    Decision Making for Effective Leadership

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    Anchoring Bias in Decisions

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    Anchoring bias is a cognitive bias where people rely too heavily on the first piece of information, or "anchor", when making decisions. Once an initial anchor is set, people have difficulty adjusting away from it sufficiently, resulting in final guesses that are closer to the anchor. Anchoring bias can be overcome by re-anchoring - replacing the initial anchor with a new anchor grounded in different facts, such as criteria-based forecasts. To avoid anchoring bias, decision makers should re-examine problems from different perspectives, identify any unconscious anchors like historical data, and make new decisions open to re-anchoring based on different information.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    182 views9 pages

    Anchoring Bias in Decisions

    Uploaded by

    mandeep sh
    Anchoring bias is a cognitive bias where people rely too heavily on the first piece of information, or "anchor", when making decisions. Once an initial anchor is set, people have difficulty adjusting away from it sufficiently, resulting in final guesses that are closer to the anchor. Anchoring bias can be overcome by re-anchoring - replacing the initial anchor with a new anchor grounded in different facts, such as criteria-based forecasts. To avoid anchoring bias, decision makers should re-examine problems from different perspectives, identify any unconscious anchors like historical data, and make new decisions open to re-anchoring based on different information.

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    Group -4

    For Effective Leadership


    BUSTING ANCHORING BIAS
    Section: B Group 4
    Anchoring Bias - Definition
    Anchoring Bias is one of the cognitive biases that states it is human’s nature to rely too heavily on
    the first piece of information received (the “anchor”) when making decisions.
    Anchoring Bias
    Causes of Anchoring Bias
    Anchoring-and-adjusting
    Once an anchor is set, people adjust away from it to get to their final answer; however, they adjust insufficiently, resulting in their final
    guess being closer to the anchor than it would be otherwise.

    Selective Accessibility
    ● When given an anchor, a person ( a person making some judgment) will evaluate the hypothesis that the anchor thinks is a
    suitable answer.

    ● Assuming it is not, the judge moves on to another guess, but not before accessing all the relevant attributes of the anchor itself.

    ● Then, when evaluating the new answer, the judge looks for ways in which it is similar to the anchor, resulting in the anchoring
    effect.

    Attitude change
    Providing an anchor changes someone's attitudes to be more favorable to the particular attributes of that anchor, biasing future
    answers to have similar characteristics as the anchor.
    Influencing Factors
    1. Mood
    Sad people are more likely to use anchoring than people with happy or neutral mood.

    2. Experience
    While experience can sometimes reduce the effect, even experts are susceptible to anchoring.

    3. Personality
    People high in agreeableness and conscientiousness are more likely to be affected by anchoring, while those high in
    extraversion are less likely to be affected.

    4. Cognitive ability
    It is highly contested. A recent study on willingness to pay for consumer goods found that anchoring decreased in those with
    greater cognitive ability, though it did not disappear.
    Overcoming Anchoring Bias while Decision Making

    An anchor is such a powerful influence that only another anchor can overcome it. Re-anchoring replaces the number
    in the head with one grounded in a different set of facts:

    • Set some fact-based, non-historical criteria.

    • Build and calibrate a forecasting model based on these criteria.

    • Use the model as a second anchor


    Conclusion

    Before Taking decisions:

    ● Re-examine every problem from different perspectives.

    ● Explore whether are there any anchors existing unconsciously such as historical data.

    ● Make new decisions and open yourselves to new opportunities- Re-anchor.


    Thank You

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