What is anchoring bias and how does it affect decision-making?

What is anchoring bias and how does it affect decision-making?

Anchoring bias is a cognitive bias where individuals rely too heavily on the first piece of information they encounter. This initial 'anchor' can significantly influence subsequent judgments and decisions.

Can you give me an example of anchoring bias in real life?

Sure! A common example is in pricing. If a product is initially priced at $100 and then discounted to $70, the $100 serves as an anchor, making the $70 price seem like a great deal, even if the product's actual value is much lower.

How can I avoid falling victim to anchoring bias?

To avoid anchoring bias, try to gather multiple sources of information before making a decision. Be aware of the first piece of information you receive and consciously evaluate it against other data.

Are there any other cognitive biases I should be aware of?

Yes, there are many cognitive biases! Some common ones include confirmation bias, availability heuristic, and overconfidence bias. Each can affect decision-making in different ways.