Gullible, me? No way! 🤷🏻‍♀️— Anchoring bias

Understanding how gullible we are, winning negotiations, and anchoring for self growth.

Was Gandhi more or less than 124 years old when he died?

How old was Gandhi when he died?

You, of course, know that he was less than 124 years old when he died. But your guess of his age of death is still affected by this crazy, random number.

If I first asked you whether Gandhi was more or less than 35 years old when he died, your guess of his age of death would be much less.

Our mind turns the last bit of information it receives into an anchor ⚓️. Just like a boat can float only a wee bit here, a wee bit there around the anchor, our thinking doesn’t wander off too far from the anchor that’s set in our minds.

Anchors are super common in our day-to-day lives.

While setting a budget for the new financial year, you’re influenced by last year’s budget. While setting new salaries for your employees, you’re influenced by last year’s salaries.

In spite of the fact that this year’s economy and market are entirely different from last year’s 💰.

While planning your kid’s birthday party, you’re influenced by how many kids you invited last year, in spite of the fact that you invited fewer kids last year because of COVID. You are influenced by who all did you invite last year, in spite of the fact that kids keep making and unmaking 🙄 friends each year.

Whether we realize it or not, we are more gullible to anchors than we think.

The mental mistake of relying too much on the last piece of information before making a decision is called the anchoring bias.

As you’d remember, bias is just a fancy name for a mental mistake.

The funny thing about the anchoring bias is that this ‘last bit of info’ doesn’t even need to come from a reliable source.

It can be a random number or even an absurd thought..

Do you feel slightly numb in your left leg?

To see, hear, or feel anything right before making any decision affects our decision making. It may or may not involve numbers. Just bringing it to the mind counts.

Psychologist Daniel Kahneman observed that asking people, “Do you feel slight numbness in your left leg?” makes quite a few people believe that their left leg does indeed feel a little strange.

You might think those people were gullible because an expert was asking them a question maybe in a fancy lab setting. Smarter people won’t fall for such silly baits 🤔.

For an experiment, Daniel Kahneman along with his partner Amos Tversky, rigged a spinning wheel so it’d land only at 10 or 65.

They called students of the University of Oregon as participants of the experiment. With small groups of students, they first spun the rigged wheel and then asked them two questions:

1. Is the percentage of African nations among UN members larger or smaller than the number you just saw?

2. What is your best guess of the percentage of African nations in the UN?

The smart students knew that the number on the spinning wheel (rigged or not!) can’t provide them with any useful info. They should have ignored it 💯. But they didn’t.

The average guess of those who saw 10 was 25%, little higher than their anchor. The average guess of those who saw 65 was 45%, little lower than their anchor.

Even experts tend to fall for anchors.

If experts get influenced by the anchoring bias, imagine what happens to others. Imagine what happens to kids.

Why are kids louder after a playdate?

When we are unsure but we have to make a decision, our mind relies on a strategy called adjust-and-anchor.

e.g., if a real estate agent asks for $350,000 for a property, you might negotiate and likely happy to settle at $250,000.

The problem with this strategy is that we don’t adjust enough.

You won’t offer $100,000 or even $200,000 even though that might be the real value of the property.

Insufficient adjustment is the reason why you tend to drive too fast coming off the highway into the city streets.

Insufficient adjustment is the reason why kids are louder when they are back from a playdate with five other loud kids. They think they are being quieter now but their level of adjustment isn’t enough. Their anchor from the loud playdate is set too high.

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So far, it feels like the anchoring bias is always taking us for a ride, whether we are parents, kids, or professionals.

What can we do to not get swayed by the anchoring bias?

The rest of this post focusses on how to use anchoring to our advantage.

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Want to win the negotiation? Make the first offer.

Psychologist Adam Grant encourages executives to make the first offer in a negotiation.

Although most people would say, “I don’t want to tip my cards before I see your hand”, he reasons that by setting the anchor, you’ll end up getting 50% more than what you would have gotten otherwise.

“I had people say well I’m not prepared to make the first offer and my response to that is then you’re not prepared to negotiate”

— Adam Grant

Making the first offer helps set the terms and tone for the negotiation. It helps you take the charge.

Unsure but tempted? Delay the purchase.

How many times have you come home after a big buy repenting it? How many times have to felt good about not making that random buy?

Delaying decisions before making a purchase is always a good idea.

Especially before a big buy, always, sleep on it. Moving away from it gives your mind time to factor in important details and adjust your anchor.

Delaying also gives you time to consult multiple sources and make a wiser decision.

It’s also wise to make big decisions when your mental energy is NOT depleted.

Your mind tends to fall for the anchoring bias when it’s tired, bored, or lazy.

So it’s the worst time to shop after a boring meeting, after a few drinks down, or when you’re hungry. It’s a good reminder for my friends and I to stop exploring air tickets to Bali during our Friday evening wine sessions🍷!

Using anchoring for self growth

We lived in India 11 years back. Most people in our neighbourhood went for evening walks for around 30-45 mins. I did too. That was my anchor—30 mins of evening walk.

I would sometimes go for a 10-min light jog. Sometimes, I would walk for an hour. I won’t astray from my anchor, that is, 30 mins of walk.

Then we moved to Singapore. I was amazed by the average level of physical activity here. To my surprise, going for 10k walks and 5k runs was so basic. Everyday commute to and fro from work involved a 30 min walk. Marathoners were common, not a rare breed, what the heck 😮!

My old anchor got uprooted.

Living in a neighbourhood with every other person running in a marathon, I too signed up for a 10k. I enjoyed the run so much that next year I signed up for a 21k, the next year a full marathon, and the year after, and the year after! If you told my past self that I would be running 42k, she’d find it hard to believe.

The fastest way to achieving new heights is to surround yourself with people who are doing what you want to do, who are where you want to be.

Use anchors to raise your standards in your mind and to expect more out of yourself. That’s the easiest path to self growth.

Set your anchor where you strive to be.