Anchoring on Valuations and Perceived Randomness

Ioannidis, Konstantinos

doi:10.2139/ssrn.4158383

Cited by 1 publication

(2 citation statements)

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“…For example, a more precise anchor may be believed to be more informative and it consequently influences subsequent judgment more than a less precise anchor (Zhang & Schwarz, 2013). Ioannidis (2023) also has shown that when more information about an anchor is provided, people perceive the anchor as more informative, leading to stronger anchoring effects. However, the conversational inferences account does not fully explain why anchors influence judgment even if they are implausible or clearly uninformative.…”

Section: Conversational Inferencesmentioning

confidence: 99%

“…The effect of anchoring on valuations is robust even when the decisions are consequential , and a recent meta-analysis suggests that monetary incentives do not attenuate the anchoring effect on valuations (Li et al, 2021). It has been shown that revealing a random draw of the anchor rather increased the anchoring effect on the valuation compared to when the randomness information was not provided (Ioannidis, 2023). The effect of anchoring was comparable between buying and selling contexts when people had not made selling decisions before an anchor was provided (Simonson & Drolet, 2004).…”

Section: Valuation and Purchasing Decisionsmentioning

confidence: 99%

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Anchoring effect in business

Bahník,

Yoon

2023

Preprint

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In many business and managerial decisions, accurate estimation of numeric attributes is crucial, but such estimates are often biased by a previously considered value—a cognitive bias known as the anchoring effect. This paper provides an overview of the current state of the literature on the anchoring effect, with a particular focus on its applications in business settings. First, we summarize different processes that may underlie the anchoring effect, which include conversational inferences, insufficient adjustment from the anchor value, selective accessibility of information compatible with an anchor, and distortion of a response scale. Second, we review the applications of anchoring across various business practices, such as predictions, valuations, negotiations, auctions, promotions, and job performance evaluations. We provide examples of potential sources of anchors in these domains and discuss limitations of the existing studies. Next, we describe the challenge of debiasing anchoring and introduce potential strategies for reducing the influence of the anchoring effect. Finally, we discuss topics that have been underexplored and suggest avenues for future research on the anchoring effect.

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Section: Conversational Inferencesmentioning

confidence: 99%