Why sales people love the slippery psychology of the anchoring effect

You're in a new situation, with no idea what to expect. Naturally, you look around for context that will help you figure out how to act. Mostly, that's a good way of getting through the situation. Occasionally, though, it'll get you in trouble. Why? That's where the anchoring effect comes in.

The anchoring effect is a well-known psychological phenomenon that is used by salespeople everywhere. Most people know that the prices of cars are a higher than they're supposed to be, and that negotiating a better price is the first step to buying a car. Try as they might, though, they will keep that original price in mind. Just suggesting the higher number will provide an anchor from which the person can't stray too far. This goes for everything, from shoes to designer jeans. Unless people do a comprehensive survey of the market, and study the realistic retail costs for most products they buy, they'll decide based on the initial price.

But anchoring doesn't only work with prices and direct negotiation. Any suggested numbers will have an effect on how you see things. A psychology researcher conducted a study in which participants were asked to estimate the height of the Brandenburg Gate. This was not a fact that they would likely have come across in their studies. Some participants got a preliminary question, asking whether the Gate was taller or shorter than 150 meters. Some did not. The ones that did receive the preliminary estimated the Brandenburg Gate as having a height close to 150 meters.

Experts aren't immune from this kind of influence. A survey the decisions of trial judges looked at the sentences they handed out for identical crimes. The sentences depended, to a surprising degree, on what people in the trial had asked for. If someone, even a non-expert, asked for the convicted criminal to be sentenced to around thirty-four months, the judges usually sentenced them to eight months longer than they did if someone during the trial had asked for a sentence of twelve months.

Sometimes recommendation or direct suggestion isn't necessary. In a fake auction, psychologists had students write down the last two numbers of their social security numbers on pieces of paper. The ones who wrote high numbers were more likely to bid high. The ones with low numbers didn't think the goods were as valuable.

It's clear that we're wired to take into account other people's suggestions, even if those suggestions are not necessarily rational or in our best interests. This isn't a terrible way to be. We're social animals, and insisting on prices, amounts, or sentences far different from the people around us isn't very sociable. And since we are social animals, we do give each other social clues. Not every preliminary question in an exam is an attempt to grossly mislead us as to the height of the Brandenburg Gate (which is, by the way, about 26 meters tall). And not everyone is asking for a slap on the wrist or a sentence out of Les Miserables during a trial. People actually do often ask for around what they think is fair, and then negotiate from there. But as we see, sometimes the suggestions we receive work against us. Sometimes fixing an amount in our minds before we go into an evaluation situation, setting down our own anchor, can be a good idea.

Image: Deutsche Foto

Via Attitudes and Social Cognition, The Anchoring Effect, and You Are Not So Smart.