📖 Reading Passage
The concept of 'anchoring' refers to the tendency of individuals to rely heavily on the first piece of information they encounter (the 'anchor') when making decisions. Even if the anchor is arbitrary or irrelevant, it can disproportionately influence subsequent judgments. Anchoring occurs because people adjust insufficiently away from the initial value, leading to biased outcomes. This cognitive bias affects various domains, including pricing, negotiation, and everyday choices.
🎧 Listening Lecture
Professor: Now let me give you a real-life example. Imagine you're shopping for a used car. The dealer first shows you a car priced at $30,000. You immediately think, 'Wow, that's expensive.' But then the dealer says, 'Actually, this one is $25,000.' You feel relieved and think it's a good deal. Now, if the dealer had started at $20,000 and then said $18,000, you might still feel it's a bit high. In both cases, the final price is similar, but your perception of the deal changes because of the initial price. The first number you saw served as an anchor. Even though $30,000 was arbitrary, it made $25,000 seem reasonable. This shows how anchoring can manipulate your judgment.