Exploring anchoring effect and the moderating role of repeated anchor in electronic commerce

Abstract

Most of the anchoring studies conduct the experiments following two-stage experimental design in which a comparative judgement is followed by an absolute estimate. However, this design is impractical in many situations, especially in online auction environments where consumers cannot be asked to make comparisons before they make estimates. This study suggests and validates an alternative experimental design where no comparison process is needed to induce anchoring bias. Moreover, we postulate that repeated occurrence of anchoring points affect the strength of the anchoring effect on participants' price estimates. Two experiments were conducted to investigate the anchoring effect in both two-stage and one-stage designs. The results showed that the anchoring effect was robust under two-stage design, and repeated occurrence of the anchor did not reinforce the anchoring effect. Moreover, people's price estimates are susceptible to the anchoring effect even when they were not asked to make a comparative judgement before they determine the final estimate. However, the anchoring effect can be further consolidated when the anchor appears three times rather than once. Experimental design introduced in study 2 provides a promising website design direction and we suggest that high anchors should be embedded in a web page repeatedly to influence the buyers' value estimates to produce a premium.

The effects of anchoring on backers' pledge in reward-based crowdfunding: evidence from Taiwanese market

“…Their results repeatedly verified that the numerical decision can be higher when the subjects see a higher numerical anchor than a lower one (e.g. Ames and Mason, 2015; Strack and Mussweiler, 1997; Tversky and Kahneman, 1974; Wu et al , 2008; Wu and Cheng, 2011). Mussweiler and Englich (2005) also pointed out that people's subconscious is affected by anchors.…”

“…Previous studies have pointed out that in e-commerce, the presence of any numerical value becomes an anchor point that influences the price that people are willing to pay (Wu et al , 2008). In the stock market, the average stock price over different periods will be the basis in considering price prediction of future stock prices (Baucells et al , 2011).…”

“…Anchoring effect exists in our daily life. For instance, the occurrence of any numerical value on the electronic commerce website can be the anchor to influence people's willingness to pay (Wu et al , 2008), and a higher anchor will lead to high willingness to pay (Wu et al , 2008; Wu and Cheng, 2011). In the study of the stock market operations, Duclos (2015) explored how people forecast future trends and make subsequent investments via the current stock prices.…”

“…Moreover, in crowdfunding, the backing information of previous backers will affect the backing decision of subsequent backers (Burtch et al ., 2013b, 2016). Besides, in online shopping, the occurrence of any numerical value may become an anchor affecting the price consumers' willingness to pay (Wu et al , 2008). Thus, we would like to determine if showing the current average amount pledged on the crowdfunding project page will influence the subsequent backers' amount pledged.…”

Bidding Strategies for Spot Instances in Cloud Computing Markets

“…As part of future work, we intend to quantify the results using user bid data from lab experiments. In addition, we plan to test effects such as anchoring 15 on bidding strategies.…”