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anchoring-heuristic Decision Making

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To take one of Dans examples, lets say as a holiday company you provide potential customers with the option to go on a holiday of their choice, with one option being Rome and the other being Paris. These holidays are both free, and that includes everything flights, hotels, the lot.For most people, this would be a pretty difficult decision. Both cities have interesting cultural backgrounds, good food, monuments etc. and the customer must choose between the two.However, as Dan says in his talk (about 12 minutes in) if you add in a third option Rome without free coffee in the morning this means that the customer then anchors their choice against this third, less appealing option. The idea of going to Rome, and having free coffee, is superior to going to Rome and having to pay for coffee in the morning.Moreover, and perhaps most importantly, Rome with free coffee also becomes superior to Paris with free coffee. Rome without free coffee became a point relative to which a decision could be made.If you watch Dans TED video, he gives a few more examples of this type of idea the Economist advertising is a particularly good one.


Definition: Anchoring is a term used in psychology to describe the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions.

ANCHORNG Demirleme Sapmas: Kiinin nnde pek ok daha iyi seenek varken, seeneklerden birinin bir tek zelliini beenerek, o seenekte karar klmas ve dier seeneklerin deerini hafife almas. (Anchoring veya Focusing bias, Kahneman ve Tversky) Bence, estetie ve tasarma dkn tketiciler kesinlikle bu sapma ile davranyorlar. Bir rnn estetii, o rnn dier zellikleri ortalamann altnda olsa bile, seilmesi iin yeterli olabiliyor. (Kendimden biliyorum).

While there are many better options in front of the person, like a single feature of one of the options, decide on that option and get the value of the other options2


Statisticians have consistently measured the effect of the anchor value on the estimate that people makeFor different anchors, people make different estimatesFor any given change in the anchor, the estimate tends to change by 55% of the change in the anchor

statistikiler, demirleme sapmas deerinin insanlar tarafndan yaplan tahmine olan etkisini srekli olarak ltFarkl demirlemeler(karar klma) iin insanlar farkl tahminler yapyorTespitteki herhangi bir deiiklik iin, tahmin, apa deiiminin% 55'ine deime eilimindedir


Experiment:Business students were told their professor would be doing a 15-minute poetry reading. Half were asked if they would be willing to pay $2 to attend and half were asked if they would be willing to attend if they were paid $2. After answering, students were then told that the poetry reading would be free and were asked if they wanted to attend.

Question:Would the initial anchoring of the experiences value affect who would attend for free?

Ariely, D. (MIT), Lowenstein, G. (Carnegie Mellon), & Prelec, D. (MIT), 2006, Tom Sawyer and the construction of value. Journal of Economic Behavior & Organization, 1-10.

Iletme grencilerine profsrn 15 dk bir iir okuyacag sylendi. Yarm katlmclara 2 dolar demeye istekli olup olmadklar soruldu Eer 2 dolar dendiyse katlmak isterlerse. Yantladktan sonra, rencilere iir okumasnn cretsiz olaca sylendi ve katlmak isteyip istemedikleri soruldu.5

Ariely, D. (MIT), Lowenstein, G. (Carnegie Mellon), & Prelec, D. (MIT), 2006, Tom Sawyer and the construction of value. Journal of Economic Behavior & Organization, 1-10.

Perhaps students were just using price as an estimate of unknown quality?

Experiment #2:Now the professor first read poetry for 1 minute so that students actually experienced it. Then one group was asked if they would be willing to pay to attend, the other group if they would be willing to attend if paid.

Question:Would the anchoring effect go away when people were allowed to sample the experience first?

Ariely, D. (MIT), Lowenstein, G. (Carnegie Mellon), & Prelec, D. (MIT), 2006, Tom Sawyer and the construction of value. Journal of Economic Behavior & Organization, 1-10.

Ariely, D. (MIT), Lowenstein, G. (Carnegie Mellon), & Prelec, D. (MIT), 2006, Tom Sawyer and the construction of value. Journal of Economic Behavior & Organization, 1-10.


Anchoring shows excessive influence of nearby comparisons Be intentional about choosing comparisons, instead of automatically using the easy anchor.You can change your nearby comparisons by changing your environment or your focus within your environment

Your teen is in desperate need of a new wardrobe. You set a day for a shopping trip. Lucky you. Its not long until your daughter finds the perfect pair of jeans. Great, you tell her until you check the price tag: $149.95.

Sorry honey, no deal. Too expensive. Im sure you can find another pair of nice jeans thats less expensive.

No, I love this one; I have to have it. Her voice has become a screech when a saleswoman approaches. Do you know that these jeans are on sale, this week only, marked down 25 percent?

Mom, thats perfect. If we get four pairs of jeans, thats like getting one free.

Daughters delighted. Mom feels conned. Whats happening here? Ah, the anchoring effect in action.

Is it just that daughters a spoiled brat and moms a tightwad? Sorry, its not that simple. To understand whats going on here, you need to appreciate the power of the anchoring effect.

How do you know how much you should pay for something? How do you know whats a deal and whats a ripoff? You need some sort of reference point. A cue to help you evaluate. For your daughter, the reference point is $149.95. The discount makes it a real bargain, so why is Mom still giving me a hard time?

Your reference point, however, is quite different. You remember, when you were a kid, a great pair of jeans cost no more than $50. Sure, prices have gone up but three times the price? Crazy! No, in your mind, these jeans are way too expensive.

The anchoring effect is a cognitive bias that influences you to rely too heavily on the first piece of information you receive. And its not just a factor between the generations. Stores use it all the time to convince you to buy.

MSRP for a new Lexus is $39,465. You negotiated a price for $35,250. You feel terrific. You believe you got a great deal. The anchoring effect has worked!You paid $80,000 less for your home than the initial price offering. Were you a great negotiator or is this one more example of the anchoring effect?J. C. Penney thought it was a smart move to eliminate coupons and instead create everyday low pricing. Too bad they werent aware of the power of the anchoring effect. When sales slid bigtime, they got the message. Theyve now reversed their policy and customers are returning. We need that anchor number to inform us that were getting a bargain.

The anchoring effect influences us in many areas, not just money.

Whats an acceptable curfew for a 16-year-old? If you had to be home by 11 p.m. on a weekend evening, a 1 a.m. curfew wont feel right, even if all the kids are doing it.If your same-sex parent died at age 52, living to 82 will feel like a real bonus to you. But if your parent died at 82 and youre diagnosed with a fatal disease at 52, boy, will you feel let down.If a husband is doing ten times more housework than his dad ever did, he may feel entitled to a best husband of the year award from his wife. Imagine his surprise then, when his wife berates him for not doing enough. Whats going on here? Blame it on the anchoring effect. His anchor is what his dad used to do. Her anchor is the amount of housework she does. Fair is fair, she says. After all, Im working full-time too.One last example. If youre in therapy, finding it incredibly helpful in alleviating your anxiety and enhancing your self-confidence, you may still decide to keep your therapy a secret from your parents. Why? Because they are anchored in the belief that only crazy people seek therapy. And who wants to be thought of as crazy?

Now that you appreciate the power of the anchoring effect, be smart. Take into account not only your initial thought, but other relevant ones that will expand and enhance your decision-making.10

The Anchoring and Adjustment HeuristicPeople often estimate by adjusting an initial value until a final value is reachedInitial values might be due to the problem presentation or due to partial computationsAdjustments are typically insufficient and are biased towards initial values, the anchor

COGNITIVE BIASESLets do a math problem really quicky, and you have gotta do it in your head .

When the psychhologists Dann Kehneman and Amos Tversky tried this with human subjects, subjects on average guessed about two thousand two hundred and fifty,

When the psychhologists Dann Kehneman and Amos Tversky tried this with human subjects, subjects on average 12

But now, let's suppose I gave you a different math problem.

What if I gave you this one? If you are like Kehneman and Tverskys subject,your answer might be a bit different here .for this question,their subjects guessed a lot lower.On average they said the answer was about 512,Mathematical estimates is that people get the answers really

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