Name: How to use the Anchoring Effect (and not have it used against you)
Uploaded: 2024-06-17T03:41:40.000Z
Duration: 2 min 31 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

The Anchoring Effect Whenever we have to guess something, let's say the population of Russia, we use anchors.

Participle clauses

Starting with something we know for sure to be true, so it must be greater than 1, must be less than 7 billion, and is less than the population of China.

We then take these anchors and explore the unfamiliar territory.

Unfortunately, we use anchors when we don't need to.

Take a moment to pause and look at these two questions.

Is the height of the tallest redwood tree more or less than 1,200 feet?

What is your best guess about the height of the tallest redwood?

If we ask Group A these two questions and Group B these two questions, we would consistently get very different answers because of the anchoring effect.

The words and numbers we use anchors people's decisions.

But the anchoring effect doesn't only apply to numbers that appear informative, such as in the tree example.

According to Kahneman, anchors that are obviously random can be just as effective as potentially informative anchors.

An experiment was conducted on German judges with an average of 15 years experience.

Each judge was read a description of a woman who had been shoplifting, then asked to roll a pair of dice, which were loaded to only add up to 3 or 9.

As soon as the dice stopped, they were asked to answer how long they would sentence this woman.

The judges who rolled a 9 on average gave her an 8-month sentence.

The judges who rolled a 3 on average gave her a 5-month sentence.

The researchers found that the anchoring effect was influencing their judgments.

Numerous other studies using arbitrary numbers like the last digits of phone numbers or social security numbers also confirmed our anchoring bias.

In sales and negotiations, anchors are being used all the time.

And there will be people who are willing and able to set up this mind trap and exploit the anchoring effect against you.

The car salesman setting a high price from the start so that the price that he actually wants to get from you seems like a good deal.

The $150 dress at the front of the store sets the anchor for the $50 dress at the back of the store.

 Be sure to check out the full-length series where we go through 21 of the most common mind traps, thinking errors, biases, effects, and other phenomenon that have the biggest impact on your thinking and decision making.