Secrets de Marketeurs

What is the Weber-Fechner law bias?

The Weber-Fechner law is a cognitive bias that makes people believe that the changes in our senses are proportional to the initial stimulus.

Why this bias is dangerous?

This cognitive bias can cause disasters if we have a control system based on it, because small variations in the input data will generate large variations in the output data.

For example: If a nuclear power plant has a sensor measuring temperature and a circuit based upon that input which controls the temperature of water being circulated through the reactor core, then any slight increase or decrease from normal temperature will lead to significant problems for everyone, as well as causing potential damage to resources and people near it. This may be especially problematic with systems designed to respond accurately to smaller changes.

Why do people use this bias?

This cognitive bias is used because it is easy to understand, and therefore easy to remember. This makes it very intuitive for experienced professionals. It also provides people with a sense of control over their sensory environment.

How do people use this bias?

People often expect the changes in our senses to be proportional to the initial stimulus. For example: The weight will feel lighter if we remove 10 % of the load, or heavier if we add 10% additional weight.

The reason behind it can be explained by Weber’s law which describes that “the just-noticeable difference between two stimuli is a constant fraction of the original stimulus”.

It means that when something increases/decreases by 1%, we can notice it more than if it increases/decreases the same amount again the next time.

How can we create this bias?

We can use many strategies to increase this cognitive bias. For example: We can use knowledge of Weber-Fechner law in advertising campaigns for promoting products, or by making people believe that some activity will be of greater benefit than another.

Another great strategy is telling people that they are changing something very slowly and gradually until they reach a desirable result. It gives them confidence that whatever they do, everything will be okay at the end..Many people fall under this trap because it seems rational according to their common sense about how our senses work.

An effective way to create this bias is by using examples that show people how Weber-Fechner law works in natural world.

For example: This principle is used in audio mastering during sound recording and audio levels, where the human ear hears louder sounds as brighter due to the principle of Fechner’s Law.

Examples of Weber-Fechner law:

1) People tend to believe that they are getting better at things the longer they invest in them.

2) The time it takes to recognize a difference between two stimuli is directly proportional to the magnitude of the intensity of those stimuli.

3) The game Pokémon Go has an extensive tutorial before starting, which seems like forever but quickly becomes irrelevant as you grow accustomed to the game.

4) If you are an amateur tennis player, playing against Wimbledon champion is probably discouraging because you will expect yourself to lose and play not that well. The same thing can happen if you buy a new TV and don’t like the sound it makes.

Which profession use the Weber-Fechner law bias?

There are many professions that use this cognitive bias to fool their clients into thinking what they do is legit or special. For example: Psychiatrists regulate your brain chemicals without having an evidence that it can actually work.

Another great example is artists tell you how much time they spent on painting your picture, but they don’t tell you that all of the work is behind the scene before this final product is created.

Weber-Fechner law conclusion.

As we can see it’s very easy for us to get caught under this bias if we don’t know exactly how it works or what are its effects. It’s good to be aware of strategies that would create this cognitive bias so we can avoid them in our life.

What is the Money illusion?

The money illusion is an error in thinking about cash or currency. During the money illusion, people treat the nominal price of goods as having constant purchasing power. This means that they believe that if $1 was $1 last year, it should be $1 this year too. Thus, when prices rise due to inflation, people are unaware of it because their cash seems to appropriately buy the same amount of goods and services as before.

Why does it work?

People always make decisions based on the information available to them at a given time; what is obvious now may not be true later. For instance, buying a home seems like a good decision now but after paying for 30 years you might realize why renting is actually much better (if you don’t want to stay in the same place, of course). If one only considers the cost of the home today, then paying for it over several decades may not seem that terrible. However, if you are unable to think about the future value of money (for example, inflation), then this bias is introduced into your decision making process.

Why does this bias is dangerous?

To make predictions about future purchasing power requires some awareness of how much prices will change over time. If people are unaware or ignore the fact that prices will increase due to inflation, they might borrow too much money and later find themselves in financial difficulty. Indeed, consumers who borrow large amounts tend to underestimate the impact of future interest rate hikes on their repayments . Making decisions in the short run by using information that is actually true for the long-run is a classic example of this bias.

Why do people use this bias?

First reason: The economics principle, opportunity cost neglects when making decisions. Second Reason: People are not aware of how much prices change because they do not check prices regularly. Third reason: People tend to think about their incomes when making consumption decisions without thinking about inflation when looking at future consumption plans. Fourth reason – consumers may choose between popular products which increase their risk of being influenced by money illusion. Fifth reason – popular economic theories could generate the Money illusion because it often uses perfect market assumptions, where demand and supply move price towards equilibrium without considering human behavior or other factors.

How do people use this bias?

People like to use their current income to make future consumption plans. o When making a decision about savings and investments, people neglect the fact that inflation will decrease purchasing power in the future. o A business owner might be inclined to borrow money because they feel as if it will not affect them in the long-run. For example, you might think that your net worth today is $40,000 but by borrowing $15,000 now at 5% interest you will have $50,000 soon without considering how much money will be worth later and thus having no idea whether or not it would actually be advantageous to take the loan . It simply does not occur to them that using today’s dollars to make a decision about tomorrow’s dollars is incorrect.

How can we create this bias?

First of all, it is the consequence of the difference between nominal and real interest rates as well as wages that may drive people into debt. When interest rates fall, then borrowing becomes cheaper and thus individuals prefer higher debts rather than savings for future expected profits. Second method: The media might play a role in creating this money illusion by not considering how much prices will change over time and so consumers rely on their existing knowledge when making decisions without looking at any other numbers or information before them . Finally, humans tend to think about their incomes when making consumption decisions but fail to think about inflation when looking at future consumption plans which results in bias because they ignore the inflation which will decrease the purchasing power.

How to avoid this bias?

First step: People should try to take into consideration how much prices change over time when making decisions. Second step: Recognize that it is impossible to predict future interest rates and so you should always consider saving rather than borrowing money, especially if the amount of money borrowed is large and not affordable. Third step: We can avoid this by thinking about our future income and how inflation might affect us then since we save for rainy days we should not spend what we haven’t earned yet. Fourth step: You need to learn about inflation and make sure you do not neglect it in your decision making process because it can lead you to lose control over your finances . Finally, you should not rely on popular economic theories to make decisions, instead you need to use your own common sense and knowledge because it will help you avoid this bias.

Which profession use the Money illusion??

Business owners, consumers and borrowers are most likely to be affected by this cognitive bias because they think about their current income and consumption plans without taking into consideration inflation for future consumption plans. It is important to recognize that all of us suffer from the money illusion but we can control it and avoid making costly mistakes which will both affect your finances and relationships with people who depend on you .

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Conclusion: The five reasons listed above describe how our thinking influences decision-making processes where we could encounter problems such as the Money Illusion. First reason: People like to use their current income when planning future savings or consumption plans. Second reason: Consumers may choose between popular products which increases their risk of being influenced by marketing and end up with a product that is not as high quality as they thought. Third reason: Borrowers may be inclined to take out loans for more than they can afford because interest rates are now lower. Fourth reason: People tend to think about their income when making consumption decisions but neglect inflation which is an important factor in the future. Fifth reason: The media might influence people without considering how much prices change over time which can create a money illusion .

What is the Framing effect?

The framing effect is a cognitive bias that occurs when people change their preferences based on the way information is presented. Framing refers to how changes in context alter perceptions of the same choice alternatives.

Why does it work?

Our decision-making process can be influenced by irrelevant factors, such as how choices are framed (the order in which options are offered, for instance). Cognitive errors like these can arise due to shortcuts our brain takes when making decisions; they’re an attempt to resolve cognitive dissonance between new information and existing beliefs. They also occur because we rely on mental heuristics, or rules of thumb, that simplify complex problems (e.g., if you’ve heard of the person/company before, you will make different assumptions about them than if you’ve never heard of them).

Why is this bias dangerous?

When people are presented with information in different ways, their behavior can be influenced without them even realizing it. The framing effect may make you more likely to accept a certain argument because its conclusion seems inherently desirable (consider two options: (a) 10% chance to win $1 million or (b) 90% chance to lose $100. Option b will seem much more attractive if the loss is framed as « 90 percent off » rather than « 10 percent on). For businesses, marketers, and advertisers, shifting the way the decision is framed allows for an increased ability to persuade consumers. If one benefit of your product is emphasized over another, it puts consumers at a disadvantage because the brain naturally prioritizes more recent information.

How do people use this bias?

The framing effect is most likely to come into play when we make decisions that involve risk and probability (e.g., whether or not to vaccinate yourself or your child). It is likely, in these cases, for us to be overly influenced by how these risks and probabilities are framed (simply put: we don’t like losing, even if it means gaining something else) .

One common example of this occurs when people choose whether or not to participate in an investment scheme. The scheme offers a low-risk/high-reward scenario: invest $100 now with promises of large returns later on. However, most people would be hesitant to invest in this type of scheme because it involves risk.

However, the same investment option is framed differently depending on how you look at it. The high-risk/high-reward scenario (invest $100 now with promises of no return) makes many more people willing to invest versus not investing at all.

How can we create this bias?

The framing effect works best when one side has a slight edge over the other (e.g., 90% chance of losing $100 versus 10% chance of winning $1 million). For example, if someone were asking for donations for an organization that helps feed families in need over the holidays, they might frame their request as « Help feed 25 families this holiday season » or « Don’t let 10,000 families go hungry. » The first option frames the benefits as a gain to those who help, while the second focuses on how many families will be affected if you don’t.

How to avoid this bias?

In order to reduce the impact framing has on your decisions, it’s important that you recognize the effect and create an optimal environment for decision-making through awareness. For example, consider all options before making a final decision and take time to analyze them separately so you can think about each choice objectively before considering how they relate.

Framing effect examples?

You should avoid being coerced by either extreme descriptions of events (e.g., it is going to kill 10,000 people vs. it isn’t going to hurt anyone). Also, try not to think in terms of black and white (good/bad, right/wrong) since that will skew your thinking; instead, view things in terms of the degrees between two extremes (e.g., avoid using absolutes in your descriptions when possible).

Which profession use the Framing effect?

Marketers and advertisers are particularly skilled at employing framing effects to encourage you to purchase their goods or take advantage of their offers. The ability to get inside your head so effectively is what makes them so successful over time.

Framing effect conclusion.

The Framing Effect refers to how people react differently to information depending on how that information is presented. Shifting the way the decision is framed allows for an increased ability to persuade consumers and alter decisions in favour of a desired outcome (e.g., profit).

What is the Focusing effect?

The Focusing effect is a cognitive bias, which means that it refers to the way people think and act. It is part of the list of cognitive biases described by Daniel Kahneman in « Thinking fast and slow » (2011).

What does the focusing effect do?

This cognitive bias causes people to focus on one aspect when they make decisions. As a result, they tend not to take into account other factors that can influence how things turn out. That’s why this bias is dangerous; because without taking into consideration all the factors surrounding their decision-making process, their decision can be wrong or inefficient.

Why does this bias happen?

As mentioned earlier, the Focusing Effect occurs because people tend to focus on one aspect when they make a decision. As a result, not considering other factors that affect the outcome of their decisions.

Why do people use this bias?

People mainly use this cognitive bias because it is part of human nature to focus on one thing at a time and give more importance or relevance to it. In other words, focusing on an aspect which matters for them at that particular moment. It can also be used as a way to simplify difficult problems through rationalization and creating order in scenarios that we cannot comprehend easily.

Finally, individuals could acquire such behavior due to lack of experience and knowledge about the situation they are facing and thus, fail understanding how much influence each factor has on the final outcome or results of their actions/decisions.

How do people use this bias?

People tend to use the focusing effect because it gives them a sense of control over their lives. Also, many individuals find focusing on one thing at a time to be effective and efficient when trying to solve problems. As well as thinking that concentrating only on the present is more logical because it doesn’t allow us to worry about what will happen in the future or regret decisions made in the past. An example of someone using this bias would be someone who just broke up with their boyfriend/girlfriend and they think that finding another partner will fix all their problems. They forget about other important factors like how much effort they put into building said relationship or what they gained from it (e.g., experience, skills, knowledge) and how it will affect them in the long run.

Also, people use this bias because they think that focusing on one thing at a time is more efficient or logical. In other words, concentrating only on the present is easier to understand than worrying about what could happen in the future or regretting decisions made in the past.

How can we create this bias?

There are two ways for us to create this cognitive bias; by simplifying difficult problems through rationalization or making order of events that we cannot comprehend easily. It is also possible for us to acquire such behavior due to lack of experience and knowledge about certain situations. Lastly, focusing on one aspect can be seen as an effective way to solve some problems if done correctly.

How to avoid this bias?

To avoid this cognitive bias, people should try to consider more than one possible explanation for their behavior or actions. Additionally, it is important to understand not only what factors influence the final outcome, but also how much each of them affects the results. Lastly, by learning about other possibilities and having an open-minded perspective can help overcome our natural tendency to focus on just one aspect when making decisions.

An individual could also gather as much information as possible before taking any action/making a decision in order to make sure they are considering all aspects that surround said situation. Also, by understanding how each factor influences the result would allow someone to make better decisions because they would be able to better predict what will happen or gain certainty on what they are doing.

Finally, if someone seems to be using this bias too often, their friends could help them overcome it by pointing out how much each factor affects the outcome of said situation. Also, getting more experiences in different aspects of life can also help people get over this cognitive bias.

Focusing effect examples?

An example of focusing effect would be a teenager who just got his driver’s license and while driving home he is very excited so he focuses on all the great things he can do while being able to drive a car. As a result, that teenager does not concentrate on other important factors such as how careful he has to be with other drivers or even himself because there might be a lot of reckless teenagers who drive too fast on the same roads he does.

Another example would be someone who is really excited about buying a new product (e.g., smartphone, car, house) and they think that this product will solve all their problems; forgetting about how it might affect them financially for example.

Which profession use the Focusing effect?

This bias can be found in many professions such as doctors, scientists or even accountants. By focusing on one aspect of something too much without considering other factors, it is possible to make wrong decisions that could lead to unfair treatment towards certain individuals. Also, by not taking into consideration an event’s context there are high chances for someone to important details which could alter the final verdict. Overall, focusing too much on one thing at a time when making decisions could lead to important information being overlooked and in turn influence the final outcome.

Focusing effect conclusion.

In conclusion, this cognitive bias is dangerous because it could interfere with someone’s ability to make an accurate decision. In other words, by focusing on just one aspect of something we might overlook important details that would allow us to comprehend said situation better and even help us make better choices/decisions in future situations that are similar in nature. Also, people tend to use this bias when they lack experience or knowledge about a certain area because in order to overcome it we need to gather all possible information from various reliable sources so we can learn from what has been done before and we can avoid making mistakes that were made by other people.

What is the Distinction effect?

The Distinction effect is a cognitive bias which means that we tend to view two options as more different when evaluating them at the same time, rather than separately.

Why this bias is dangerous?

This can be dangerous because it can lead us to make worse decisions and take worse actions. For example, if you pay for a healthcare insurance plan but don’t read the contract, you might discover later on that there are things included in the contract which you would have never agreed upon.

How does it work?

When people try to understand their environment they seek similarities with what they already know so they will compare new options to previous experiences. However, since most of our past experiences are unique events, by comparing the current situation with those past events we will be ignoring the dissimilarities between those experiences and the current situation.

Why do people use this bias?

This can happen when you need to choose between different options, such as choosing a college major, or buying a new appliance for your house. The problem is that we tend not to consider each option separately so we don’t compare all the pros and cons of each option.

How do people use this bias?

We usually ignore much more information than we actually think about and sometimes even resort to things like stereotypes which aren’t accurate at all. In fact, one study found that from over 100 unique positive characteristics of two options (e.g., expensive vs inexpensive), participants could only accurately identify 1-2 characteristics of each option.

How can we create this bias?

Sometimes information is presented in a way that makes it harder for us to compare the options, making it more difficult for someone to generate an accurate comparison between different options. For example, if you’re choosing between two motorcycles and one has better fuel consumption but worse acceleration than the other, then providing them with information about how much you will save on gas versus how much time it takes to reach top speed will make their comparison much easier.

However, when we are comparing things simultaneously we might rely on external factors such as who is providing the information so we might opt for the motorcycle which was provided by our friend because we trust him even though he might not be well informed about these things.

How to avoid this bias?

The best way to avoid the Distinction effect is just by comparing different options separately and then choosing the option that has more benefits than drawbacks for you, rather than trying to guess whether they are similar or different.

Which profession use the Distinction effect?

This error can happen in every profession where people have to choose between different options, but it can be seen more often when people need to compare complicated things like college degrees during their job search.

Distinction effect conclusion:

The distinction effect happens when we try to understand our environment based on comparisons with previous experiences so we tend not consider all the relevant information before making a decision because we find it easier. Since most of our past experiences are unique events, by comparing the current situation with those past events we will be ignoring the dissimilarities between those experiences and the current situation. This can lead us to make worse decisions so being aware of this cognitive bias might help you in your daily life.

What is the Contrast effect?

The contrast effect was first discovered in 1781, by a man named Johann Christoph Friedrich Gutsmuths. He noticed that the color of the water looked different depending on its location.

This bias is when you notice differences between two things because one stood out more than the other.

Here’s an example: After wearing glasses for some time, you’ll look at yourself naked in front of the mirror and be surprised how bad it looks! Well, this is exactly what happens with the contrast effect.

Why this bias is dangerous?

People use the contrast effect to justify their decisions after they took them – « I bought these pants because they were cheap » but not so badly as  » are amazing ». If we go to the first case, we will be more likely to believe this statement. People tend to use comparisons as a form of evidence instead of looking at the actual facts.

Why do people use this bias?

There are different reasons why people could use the contrast effect: they want to justify their decision or they can’t really compare things because it’s too similar, so they have nothing else but to choose wether something is worse or better. This process happens mostly when we buy expensive things that can distinguish ourselves from others – « I bought these pants because I wanted to look cool ». In other words, human beings love being unique and different from everyone else.

How do people use this bias?

In general, people use two ways to compare things: objective and subjective comparisons. The difference between them is that we already have a common ground when we talk about the objective comparison while it’s not like this for subjective comparisons. We can use both ways of comparing and contrast effect to influence others and ourselves (justify our decisions).

People tend to take other people opinions into account when they make choices, so they choose what seems better in judgement. There’s no such thing as « the best option » or « the right choice », there are only options which seem like « better choices ». This way, we justify our decision by making up reasons why we did what we did – because it was the best choice! At the end of the day, beings seek comfort and safety- having a justification for our behavior is easier than admitting we don’t know why we did it.

How can we create this bias?

By using both ways of comparison and the subjective/objective distinction, you can influence people and make them believe your point of view by justifying their decision after they made it – « We chose option number 2 because it was cheaper » or « it’s just my opinion ». It’s much easier to tell people than asking yourself questions such as: Why did I choose this option? What pushes me towards certain choices? Who am I? Etc.

How to avoid this bias?

If you want to avoid the contrast effect, try looking at things objectively instead of subjectively. This way, you will be able to look at the facts without twisting them – « We chose option number 2 because it had better performance ». You can also avoid this bias by simply trying not to justify every single one of your actions.

Contrast effect examples?

Try comparing two different options with two random people, each person will choose an option based on their own opinion – subjective comparison. Now try imagining how they would feel after spending money on something they don’t necessarily want- for instance a free trip during Christmas. If you were in their place, you probably wouldn’t go even if someone paid for you – different people have different opinions and we need to respect that. This is the objective comparison: if we both and didn’t enjoy ourselves, we probably wouldn’t go again.

What profession use this bias?

People who try to convince you to do something are probably using the contrast effect, promotions are all about convincing you that other options are bad while their option is better- just think about TV commercials.

Contrast effect conclusion:

Different people have different opinions and needs so it’s normal for them not to pick the same option. However, when people choose things just because they feel like it but they don’t have any reason behind their actions, there might be a problem. There is no way of avoiding this bias since we always look at things through our lens – subjective comparison. The best thing we can do is take a step back and observe if our decisions were rational or emotional ones. Realizing this may help us make better choices.

What is the Conservation bias?

The Conservation bias is a cognitive bias that takes place when people change their preferences for an object’s perceived value.

This happens when there is a shift in the perception of the individual about the value of the object and then they change their preference and evaluation and will not care if they lose it.

Why this bias is dangerous?

If we use this cognitive biases we can be influenced by others to accept or reject ideas, information or knowledge without giving them much time to think about it. This type of bias makes us more likely to accept alternative facts as true even though these facts might not actually be true. These types of biases are particularly dangerous because these influence our decision making process and if we base our decisions on false information, we could make wrong decisions that could lead to bad consequences.

Why do people use this bias?

People tend to use this bias in religious or political debates when they feel that their opinions are threatened. They try to change the perceived value of the object, idea or belief in order to maintain their beliefs and if their beliefs are challenged, they will tend to reject the new information. In these types of discussions, there is a high risk for an argument from ignorance fallacy which means that if someone lacks evidence for his claims then he might say that it’s because we don’t have all the information about an issue so we should postpone judgment until we have acquired more information about it.

How do people use this bias?

People use this bias when they defend their ideas even though they have no valid arguments or facts that support them. They just change the object’s perceived value and its importance in order to maintain their beliefs and if they feel threatened, they will avoid changing their false knowledge instead of changing it for the correct one.

How can we create this bias?

We can create this type of bias by saying something like: « I think we should wait until we have more information about X » which means that if we don’t know something at a given moment then we should not challenge statements and opinions and if someone does challenge them then we would say that they are saying those things because they haven’t had enough time to study the topic. This is how people use this cognitive biases as a defense mechanism in order to maintain their opinions and beliefs even when they have no facts that support them.

How to avoid this bias?

We can avoid this type of bias by being aware of the effect that our environment has over our decisions, so we must be aware of what is happening around us and try not to get influenced by it. There are several things we can do for example: read books from different authors who have different opinions about a topic, watch news from different media outlets with different political views, visit places with some people who believe something very different than us and ask lots of questions. Once you start doing these things, you will realize how wrong your opinion was because reality does not match your perception. This cognitive biases works in the opposite direction too, so if you are able to change your perception about different things around you, then you will also be able to understand how this cognitive biases work.

Conservation bias examples?

There are many examples for this type of cognitive biases that could potentially prove that someone is wrong or right about something, but one example that could explain the effects of conservation bias would be people who do not believe in global warming. They don’t want to accept facts because they feel their value changes when it’s challenged and they try to change the value of global warming instead of trying to acquire more information about it. For these people, their beliefs seem more important than facts which means that they do not care whether what they think is actually correct or not and they just want to defend their ideas.

Which profession use the Conservation bias?

People who believe in conspiracy theories, people who think that moon landings were faked, people who do not believe in evolution and many other people from different walks of life use this cognitive biases because it helps them avoid accepting facts which might prove them wrong about something they think is true or right. This type of cognitive bias can be used by almost anyone no matter what profession they have and how old they are. People of all ages and professions use this type of cognitive bias to support their own opinions even if there is no valid evidence for it.

Conservation bias conclusion.

As we can see, the conservation bias is a type of cognitive biases that people use in order to avoid accepting facts or prove them right even when they do not have valid evidence. They will change the objects perceived value in order to maintain beliefs and if someone challenges them they will try to prove themselves right instead of proving their challenger wrong which means that they are trying to protect their own ego rather than learning something new. This conclusion about the conservation bias allows us to understand how this type of cognitive bias works and why it’s being used by different people all around the world without any exceptions.

What is the Anchoring bias?

Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the « anchor ») when making decisions. During decision making process, people are influenced by information presented early in the decision process which makes them anchor to this initial value.

How does it work?

The anchoring effect can be demonstrated in many different ways, but two simple examples include starting an item pricier and then bargaining down or starting at a lower price and negotiating up. As you can see attempts made by sellers to make buyers believe they will get more value out of something than what they originally intended decreases at higher prices. So if I told you $100 was the original price for an apartment, then you would probably want to pay even less. While if I told you $1,000 was the original price of the apartment, then it’s easier for me to negotiate down to a lower amount (e.g., $900).

Why this bias is dangerous?

This bias can be dangerous because some financial and business decisions are made quickly with little information or consideration of alternatives. To use an example of an insurance company that has only two car models on their lot but is hesitating between those two types for their next stock purchase. If they use anchoring, they first ask themselves what is the more popular model among customers and buy lots of this type so they will not run out of this particular model. Even though both cars might provide the same safety features, the « more popular » option has a higher probability of getting sold.

Why do people use this bias?

People are using anchoring because it is the human nature that first impression is very important. Thus, sellers are more likely to receive better prices for their product if they initially list it at a high price. Another reason behind this could be that people assume that others who are more experienced will pay higher amounts first, so they first estimate how much an expert would be willing to pay and then decide on their own amount.

How do people use this bias?

Anchoring can occur in many different circumstances, but four common examples include negotiating price, estimating numerical values, making decisions about fairness or morality, and setting goals.

How can we create this bias?

We create this bias by simply showing the initial value to the customers before they know anything about that product or service. For example, I could begin bargaining with a price of $5 for my car instead of $10,000 because it is already written on it. This makes it easier for me to reduce prices from that starting point. Another way would be mentioning an extremely high number as some kind of a starting figure first, which will make others believe they can still bargain down from it. In fact, some studies show that merely touching items’ higher price tag first can increase sales figures because buyers anchor onto these numbers without even noticing it.

How to avoid this bias?

Anchoring can be reduced by taking your time while making decisions instead of thinking about it quickly, trying to consider different options and also do not accept the first number offered. You can also make conscious effort to avoid being influenced by this bias in negotiations or even just daily conversations with other people. Instead of that, try considering different alternatives because if you are able to clearly understand all pros and cons, then you might be more likely to see the actual value behind things. Also, reading some books on negotiation could prove very helpful here. Another example would be asking further questions instead of accepting an initial offer straightaway without having a clear picture of what they are actually offering you. This will help you more information before making any decision so you can later make a better judgment.

Anchoring bias examples?

In an experiment conducted by Amos Tversky and Daniel Kahneman, participants were asked to write the last two digits of their social security number and then indicate whether this number would be higher or lower than a certain value. In one experimental condition, they gave numbers from 0 to 100 as example values. In another experimental condition, they gave numbers from 65 to 99 as example values. In both conditions, participants given higher numbers tended to pick lower ones even though the actual numerical difference was irrelevant in determining the result of the experiment. Furthermore, those who had written a larger pair of digits tended to have a stronger anchoring effect on their judgement even though these two factors were independent of each other.

Which profession use the Anchoring bias?

Persuaders, salespeople, lawyers, negotiators and marketing agents are some professions that try to use this cognitive bias most often because they like to create an initial impression by mentioning a high number first. Then they can later negotiate prices from there which creates a stronger anchoring effect on the people who first heard those numbers first. It is actually very common in everyday life as well since it happens almost every time we have to decide how much should be an amount for something or whether we agreed with something or not.

Anchoring bias conclusion.

In general, anchoring is a very strong technique to influence other people’s decision-making process as long as it happens subconsciously. This is why it is important for people to be able to recognize this bias and make an effort to overcome it, or at least remember that it can be used against them when they are in a certain situation. However, there are also some advantages associated with the use of the Anchoring Bias because people who learn how to properly use this technique can get better deals on things and feel more satisfied with what they have while having less fear of losing out on opportunities. And especially if we consider that we do not know everything about negotiating or bargaining, then using this cognitive bias could help us become better at such tasks even though we might misuse it sometimes by choosing wrong price tags first instead of finding out actual value behind things.