Robert Todd Carroll
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anchoring effectMost important human judgments are made under conditions of uncertainty. We use heuristics, or rules of thumb, to guide us in such instances as we try to determine what belief or action has the highest probability of being the correct one in a given situation. Social psychologists such as Thomas Gilovich, Daniel Kahneman, and Amos Tversky have studied several important heuristics and discovered errors associated with their use. One of these heuristics is the anchoring heuristic. Our judgments regarding the frequency, probability, or value of items is often determined by comparing the item to an anchor point. For some the anchor is a bias that determines many of their decisions. For example, some surgeons always recommend spinal fusion for lower back pain (Groopman); some therapists diagnose most of their patients with multiple personality disorder, while other therapists never see a case of MPD in their entire career. For others, however, anchor points are "readily manipulable" (Levine 2003: p. 100). If you are searching for a coat in a clothing store and the label on a coat you like has a price tag with three different prices, the two highest of which are crossed out, you may think you are getting a bargain if you accept the highest price on the tag as an anchor. Even if our anchor point is accurate, it may bias us in our assessment of the situation. For example, an emergency room physician must make many quick life-or-death decisions, but "being quick and shooting from the hip are indications of anchoring and availability" (Groopman 2007: p. 75). If a physician seems to make a snap judgment, Jerome Groopman advises us to ask the ER physician "What's the worst thing this can be?" This, he says, "can slow down the doctor's pace and help him think more broadly. You can prompt him to consider lifting his anchor from the most available harbor." The anchoring error also manifests itself when we take a few traits or characteristics of someone or something and fit them to a stereotype For example, when told that a man is quiet, shy, reserved, and self-effacing, what do you think his likely profession is, salesman or brain surgeon? Most people would probably choose brain surgeon because their stereotype of a salesman is of an outgoing, gregarious person. But the odds of any given man being a salesman are much higher than the odds of being a brain surgeon, so the probability is greater that the fellow is a salesman. When I was in graduate school in the late 1960s at the University of California at San Diego, the department hired its first black teacher. I arrived there about the time Angela Davis was finishing up her work with Herbert Marcuse, and the daily news was filled with stories about civil rights and anti-war protests. Students were coming from all over the world to study political philosophy with Marcuse and Stanley Moore. I remember how most of the graduate students assumed the new black teacher would be coming to teach political philosophy and would be radical like Bobby Seale or Eldridge Cleaver. He didn't fit the model at all. I don't remember his name but I remember he came from Ohio State and his interest was in analytic philosophy, much to our shock and dismay. He didn't fit our stereotype at all. The anchoring error is common among true believers in paranormal phenomena. Like the surgeon who recommends the same procedure for all his patients, there are many people who see events first as paranormal. If there are paranormal events, they are rare. Yet many people who have experiences that seem strange to them do not attempt to rule out non-paranormal explanations first. The probability is much greater that any given event has a physical or psychological explanation, or is a coincidence or a hoax, than that it is paranormal. The paranormal need not be ruled out, but it shouldn't be the first thing that comes to mind when, say, your computer acts up or the lights flicker. Mentalists can exploit anchoring by knowing that when asked to pick a number "people tend to pick one close, or anchored on, any number with which they are initially presented or in the case of a scale one close to the midpoint" (Sutherland: p. 168). Robert Levine gives an example of how a cable company that was raising its rates used the anchoring effect to make it appear that they were saving people money. They announced that the rumor that rates were going to go up by $10 a month were completely bogus. "You can relax. It's not going to happen. The great news is...the rate for basic cable is only increasing by $2 a month" (Levine 2003: pp. 100-101). Behavioral economist Dan Ariely (2008: ch. 2) reports on experiments he and colleagues have done that demonstrate the power of suggestion in establishing arbitrary values of goods and services as anchors. Combined with our tendency to try to be consistent, Ariely explains how we are easily manipulated into patterns of "arbitrary coherence." Once we have an anchor price in our mind, it will shape not only how we view present prices but future prices as well. In one experiment, he has the subjects write down the last two digits of their social security number. He then asked them if they would pay that amount (say $79 or $12) for a bottle of Côtes du Rhône 1998. Not only did the social security number affect the price the subjects were willing to pay, it also affected the price they were willing to pay for a bottle of 1996 Hermitage Jaboulet La Chapelle. The subjects were not wine experts but the lower their social security digits, the lower the price they were willing to pay for the wine. The correlation for both bottles of wine between social security number and price they'd pay for the wines was 0.33. (A value of 0 would mean there was no relationship. A value of 1 would mean the items were perfectly correlated, i.e., as one went up the other would go up to the same degree.) Not only did the arbitrary social security number affect what value they put on the first bottle of wine, it affected the value they put on a completely different bottle of wine. The experiment covered six different items and the results were similar for all items. The implication of arbitrary coherence is that it calls into question one of the basic assumptions of a free market and free trade. If we can be manipulated to value things in arbitrary ways, the alleged benefits of a free market are called into question. If values aren't simply matters of supply and demand evaluated by rational creatures who know what they want and need and how much they are willing to pay for it or charge for it, then it is the manipulators who stand to benefit from free trade. Traditional economics has defended a free market economy on the assumption that human beings are generally rational in their market behavior and choices. More and more, scientists like Ariely are establishing that our market behavior is more irrational than rational. See also availability error and representativeness error. further reading Groopman, Jerome. M.D. 2007. How Doctors Think. Houghton Mifflin. My review of this book is here. Levine, Robert. 2003. The Power of Persuasion - How We're Bought and Sold. John Wiley & Sons. Sutherland, Stuart. 1992. rev. 2nd ed. Irrationality. Pinter and Martin.
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©copyright 2008 Robert Todd Carroll
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Last updated 04/14/08 | ||
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