Economics Anchoring Questions Medium
Anchoring is a cognitive bias that refers to the tendency of individuals to rely heavily on the first piece of information they receive when making decisions or judgments. The cognitive processes involved in anchoring include:
1. Perception: The initial information or anchor is perceived by the individual, which can be in the form of a number, value, or any other relevant information.
2. Attention: The individual pays attention to the anchor and gives it significant weight in their decision-making process. This attention can be influenced by factors such as salience, relevance, or personal biases.
3. Encoding: The anchor is encoded in the individual's memory, becoming a reference point against which subsequent information is compared. This encoding process can be influenced by the individual's prior knowledge, experiences, and beliefs.
4. Adjustment: The individual adjusts their subsequent judgments or decisions based on the anchor. This adjustment can be either insufficient or excessive, leading to biased outcomes.
5. Retrieval: When faced with new information, the individual retrieves the anchor from memory and uses it as a reference point to evaluate the new information. The retrieval process can be influenced by factors such as accessibility, recency, or the individual's motivation to update their beliefs.
6. Integration: The individual integrates the anchor with the new information to form a final judgment or decision. The weight given to the anchor and the extent of adjustment can vary depending on the individual's cognitive abilities, confidence, and susceptibility to anchoring biases.
Overall, the cognitive processes involved in anchoring highlight how individuals rely on initial information as a mental reference point, which can lead to biased decision-making if not properly adjusted or critically evaluated.