Economics Anchoring Questions
Anchoring refers to the tendency of individuals to rely heavily on the first piece of information they receive when making decisions or judgments. Cognitive biases, on the other hand, are systematic errors in thinking that can affect decision-making and judgment. Anchoring is considered a cognitive bias because it influences our thinking and decision-making processes. When individuals anchor on a specific piece of information, they tend to give it more weight and importance than it may deserve, leading to biased judgments and decisions. This bias can occur in various economic contexts, such as pricing, negotiation, or financial forecasting.