Salvaging the Anchoring and Adjusting Heuristic

Cornell University, Ithaca NY

Investigators

Abstract

What is the likely price of the Dow next year? How long can the patient expect to live? How many lives are likely to be lost in a looming military campaign? Questions such as these confront decision makers every day. The proposed research seeks to understand, and ultimately improve, the precise psychological processes by which such judgments are made. Often such judgments are made by adjusting from some initial starting point. The Dow is at 10,500 right now, so one might estimate it will be at 11,000 next year. The last patient with the same symptoms lived for 6 months, so one might estimate a survival time of one year. Psychologists, economists, and marketing scholars have investigated such "anchoring and adjustment" processes during the past twenty-five years and have found that a person's ultimate judgment tends to be too close to the initial value-i.e., the initial value serves as an "anchor" that biases the ultimate judgment. The present research seeks to build on existing knowledge of anchoring and adjustment processes by pointing out (with empirical justification) an important misunderstanding in the current literature. The proposed experiments are designed to show that the psychological processes invoked by real-world problems like those above are quite different from those invoked in the standard paradigms used to investigate anchoring and adjustment. Real-world problems like those above involve explicit adjustment from the initial value; the standard anchoring paradigm involves simple priming of anchor-consistent information. By directing the field to the true source of anchoring effects in real-world contexts, the proposed research promises to point the way to strategies that can be used to improve the accuracy of important real-world forecasts.