Decision making skills: The Anchoring Bias
by Catherine Louis
What is the Anchoring Bias
The anchoring bias happens when we rely too much on that initial piece of data or information when we’re making decisions. It could be that this is the first bit of info you’ve grasped, shunting other information which could be even more helpful when making a decision. We then use this information as an anchor to guide our future decisions rather than using it as another piece in the puzzle.
The anchoring effect causes us to jump to conclusions. In a volatile environment Anchoring on the past will limit our ability to adapt. Any team that is pivoting will be affected by the Anchoring Bias and unlearning is a crucial skill for agile teams and product people.
“Prepare to unlearn what you know”
Jens Begemann, Founder of Wooga
Anchoring happens everywhere in decision making
Numeric anchoring is a long-established technique of marketing communication. Once a price is mentioned, that number serves as the basis for -- or "anchors" -- all future discussions and decisions. However, this anchoring phenomenon is not limited to decisions that involve numbers. Researcher Gaurav Jain, an assistant professor in the Lally School of Management at Rensselaer Polytechnic Institute, demonstrated that anchoring occurs in perceptual domains, like sight, sound, and touch [1]. A parent who asks their children “How often do you want to clean your room: each day at noon, or every other day?” uses the effects of anchoring. Anchoring happens everywhere.
The two systems that influence decision making skills
In “Thinking Fast and Slow” Daniel Kahneman describes the psychology of the anchoring effect. In his book he presents a framework to help us better understand how we think in two systems that influence decision making skills:
System 1: This system is spontaneous, instinctive, and emotional.
System 2: This system is more rational, tedious, and takes effort.
His book describes several experiments demonstrating how we often allow System 1 to lead our decision making when faced with complex and unusual situations as we try to anchor them to what we already know, relating them to patterns we’ve seen in the past. Relying on System 1 for decision making causes us to jump to conclusions, brings us to taking short cuts, unconsciously letting our personal experience influence our decision making.
The psychology of the Anchoring Bias is present in both systems.
System 1 understands sentences by trying to make them true. Daniel Kahneman describes an experiment by German psychologists Thomas Mussweiiler and Fritz Strack. In one experiment they ask the anchoring question about temperature “Is the annual mean temperature in Germany higher or lower than 20 degrees Celsius?” or “Is the annual mean temperature in Germany higher or lower than 5 degrees Celsius?” All participants were then given words that they were asked to identify. The result is that those asked about 20 degrees celsius made it easier for them to recognize summer words (“summer”, “beach”), and those that were asked about 5 degrees celsius were more likely to recognize words like “frost” and “ski.” This associative coherence in anchoring happens in our System 1 processing [2]. The effect of being primed on 20 versus 5 degrees celsius is something that you’re completely unaware of.
“The main moral of priming research is that our thoughts and our behavior are influenced, much more than we know or want, by the environment of the moment.” [3]
Daniel Kahneman
System 2 is associated with the subjective experience of agency, choice, and concentration. This is our conscious reasoning self that has beliefs, choices and decides what to think about and what to do. Anchoring in System 2 begins with starting with an anchor, then deliberately adjusting from that anchor, and perhaps insufficiently adjusting from that anchor. You have to adjust in the appropriate direction by finding arguments to move away from the anchor, which requires mental effort.
An example from Thinking Fast and Slow of insufficient adjustment: you came off the highway driving too fast onto a city street while talking to someone as you exited the highway. Psychologists Nick Epley and Tom Gilovich found evidence that we adjust less (stay close to the anchor) when our mental resources are depleted or weary [4].
“In general, a strategy of deliberately “thinking the opposite” may be a good defense against anchoring effects, because it negates the biased recruitment of thoughts that produces these effects.” [5]
Daniel Kahneman
How to avoid that anchoring affects product decision making skills
Think the opposite
Here’s how anchoring in product decision making may sound like:
“The design is not relevant to our initial customer.”
“Let's go with our first customer group for our next release rollout.”
Remember “think the opposite.” Ask yourself: have I anchored to the first customer that we discovered? Why is that? If so, continue with your Customer Discovery! The industry is changing, people are changing. Get comfortable doing discovery interviews every week. Customer interviews help us question assumptions, something you can only do by having real conversations with customers. Get comfortable getting out of the building talking to strangers.
Be satisfied only with the full story
You might hear an interviewer anchor an idea with a customer when asking something like this:
“How do you take your coffee?” The interviewee may answer “with milk”, while not sharing that she sometimes drinks a coffee, but she normally drinks tea every morning.
Encourage storytelling while interviewing. “Tell me the story of how your day started” instead of anchoring with a particular idea from the get-go.
Be mindful of the anchoring effecting decision making skills
When sharing a prototype you might hear:
“This is much different than the first prototype we saw.”
or perhaps when sharing the final design to your stakeholders you hear
“I thought it would look more like this.”
Recognize that the anchoring effect is alive and well when presenting any design or prototype to users and stakeholders. Show multiple design options and prototypes from the get-go so that there isn't one design or prototype having higher anchoring value.
What does anchoring look like to you?
We’d be happy to hear how you’ve dealt with anchoring in the comments below!
References
1: Gaurav Jain, Dhananjay Nayakankuppam, Gary J. Gaeth. Perceptual anchoring and adjustment. Journal of Behavioral Decision Making, 2021; DOI: 10.1002/bdm.2231
2:Associative Coherence: Thomas Mussweiler, “The use of Category and Exemplar Knowledge in the Solution of Anchoring Tasks,” Journal of Personality and Social Psychology 78 (2000): 1038-52.
3: Thinking Fast and Slow, Daniel Kahneman: p128.
4: Epley and Gilovich “The anchoring-and-adjustment Heuristic”
5: Thinking Fast and Slow, Daniel Kahneman: p127.
