The Journal of Socio-Economics 40 (2011) 35–42

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The Journal of Socio-Economics

journal homepage: www.elsevier.com/locate/soceco

A literature review of the anchoring effect

Adrian Furnham a,∗ , Hua Chu Boo b
a
Department of Psychology, University College London, 26 Bedford Way, London WC1h 0AP, UK
b
Department of Psychology, University of Bath, UK

a r t i c l e i n f o a b s t r a c t

Article history: The anchoring effect is one of the most robust cognitive heuristics. This paper reviews the literature in
Received 6 July 2010 this area including various different models, explanations and underlying mechanisms used to explain
Received in revised form anchoring effects. The anchoring effect is both robust and has many implications in all decision making
17 September 2010
processes. This review paper documents the many different domains and tasks in which the effect has
Accepted 5 October 2010
been shown. It also considers mood and individual difference (ability, personality, information styles) cor-
relates of anchoring as well as the effect of motivation and knowledge on decisions affected by anchoring.
Keywords:
Finally the review looks at the applicants of the anchoring effects in everyday life.
Anchoring effects
Individual differences © 2010 Elsevier Inc. All rights reserved.
Rewards

JEL classification:
A12 D03

1. Introduction cited in Chapman and Johnson, 1999). The notion of anchoring in

decision making was first introduced by Slovic (1967), who stud-
Behavioural economics is based on the science of judgemental ied descriptions of preference reversals (as cited in Chapman and
heuristics (or mental shortcuts; rules of thumb) that most people Johnson, 1999). However, the anchoring-and-adjustment heuris-
rely on reflexively (Belsky and Golivich, 1999). Heuristics are char- tics, first introduced by Tversky and Kahneman (1974) in their
acterised as an ‘intuitive, rapid, and automatic system’ (Shiloh et al., pioneering work on judgment under uncertainty, will be the main
2002, p. 417), which ‘reduce the complex tasks of assessing prob- anchoring effect referred to in the current study. The heuristic
abilities and predicting values to simpler judgmental operations’ maintains that anchoring bias is caused by insufficient adjustment
(Tversky and Kahneman, 1974, p. 1124). Although the use of rules because final judgements are assimilated toward the starting point
of thumb reduces cognitive and time constraints, sometimes they of a judge’s deliberations.
lead to severe and systematic errors such as biases and fallacies in According to Tversky and Kahneman (1974), the anchoring
decision making (Tversky and Kahneman, 1974). effect is the disproportionate influence on decision makers to make
The idea of heuristics was originally raised by Simon (1955), judgments that are biased toward an initially presented value. In a
who proposed a behavioural model of rational choice, which argues classic study by Tversky and Kahneman (1974), participants were
for a “limited” rationality, where decisions are derived through the required to provide an estimation for the percentage of African
processes of dynamic adjustment on both external (environmental) countries in the United Nations with reference to a range of ran-
and internal (human characteristics) factors. The “limited” rational- domly generated numbers by spinning a wheel of fortune between
ity models are also known as models of heuristic cognition. This has 0 and 100. Participants were asked to consider whether the actual
lead to many studies of bounded rationality and how heuristics can answer was higher or lower than the reference value presented
make accurate decisions in appropriate environments (Goldstein (comparative judgment) before the absolute judgment was made.
and Gigerenzer, 2008; Todd and Gigerenzer, 2003). Following Tversky and Kahneman’s study, many studies (see
The main focus in this review article is the robust influence of the Table 1) have illustrated the prevalence of anchoring effect in
anchoring heuristic, which is a ubiquitous phenomenon in human human decision making processes. These have demonstrated
judgement. The earliest mention of the anchoring bias can be traced the anchoring effect in a variety of domains including general
back to the research on psychophysics, where judgments of others’ knowledge (Epley and Gilovich, 2001; McElroy and Dowd, 2007;
weights were influenced by one extreme weight (Brown, 1953, as Mussweiler and Englich, 2005; Mussweiler and Strack, 1999,
2001a,b; Strack and Mussweiler, 1997) and probability estimates
(Chapman and Johnson, 1999; Plous, 1989). In general knowl-
∗ Corresponding author. edge, for example, researchers have investigated the anchoring
E-mail address: [email protected] (A. Furnham). effect by asking participants questions such as the freezing point

1053-5357/$ – see front matter © 2010 Elsevier Inc. All rights reserved.
doi:10.1016/j.socec.2010.10.008
36 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42

Table 1
Existing literature on anchoring effect in various domains.

Domains Research Examples of questions/tasks used

General knowledge/factual questions Blankenship et al. (2008), Wegener et al. The record high (hottest) temperature for a day in Seattle, Washington
(2001) The age of George Washington when he died
The average starting annual salary of college graduates in the United States
The age of Amelia Earhart when she disappeared attempting to pilot a plane
around the world
The weight of Roman Emperor Julius Caesar
The age of Ernest Hemingway when he wrote his first successful novel
The length of time an average American person spends eating an evening
dinner at home
The age of Neil Armstrong when he walked on the moon
Epley and Gilovich (2001) When was Washington elected president?
What is the boiling point of water on Mt. Everest?
When did the second European explorer, after Columbus, land in the West
Indies?
How many states were in the United States in 1840?
What is the freezing point of vodka?
What is the highest recorded body temperature in a human being?
What is the lowest recorded body temperature in a human being?
How many days does it take Mars to orbit the sun?
What is the gestation period of an African elephant? (months)
Epley and Gilovich (2005) In what year was George Washington elected President of the United States?
In what year did the second European explorer land in the West Indies?
What is the freezing point of vodka?
What is the boiling point of water on the top of Mount Everest?
What is the population of Chicago?
What is the height of the tallest redwood tree?
What is the length of the Mississippi River?
What is the height of Mount Everest?
How many days does it take Mars to orbit the sun?
How many states made up or comprised the United States in 1880?
In what year was the telephone invented?
What is the average number of babies born per day in the United States?
McElroy and Dowd (2007) Estimate the exact length of the Mississippi river
Estimate the percentage of African nations in the United Nations
Mussweiler and Englich (2005, Study 1) What is the annual mean temperature in Germany?
Mussweiler (2003), Mussweiler and Strack What is the mean temperature of Antarctic in winter (◦ C)?
(1999, 2001a), Strack and Mussweiler How old was Mahatma Gandhi?
(1997) What is the length of a whale (m)?
What is the year of birth of Aristotle?
Mussweiler and Strack (2001b) What is the length of the runway of the airport in Nuremberg (Germany)?
What is the height of the World Trade Centre?
What is the highest elevation in the Urals?
Tversky and Kahneman (1974) What is the percentage of African countries in the United Nations?
Probability estimates Chapman and Johnson (1999, Experiment How likely it was that US troops would be sent to the former Yugoslavia for
2) military action within the next year?
Plous (1989) Likelihood estimates of a nuclear war
Legal judgments Englich and Mussweiler (2001), Englich Indicate the sentencing demand that they would recommend as a defence
and Soder (2009), Englich et al. (2005, attorney (in prison or on probation)
2006) Indicate the length of the sentence as judges would decide on (in prison or on
probation)
Hastie et al. (1999), Marti and Wissler Judge liability for punitive damages and assign a dollar award if damages were
(2000) to be assessed
Valuations/purchasing Ariely et al. (2003) Willingness-to-pay on a range of products
decisions Valuations of an annoying sound in monetary terms
Mussweiler et al. (2000) Valuation of a 10-year-old car
Wansink et al. (1998) Purchasing decisions on groceries
Forecasting Critcher and Gilovich (2008) Estimations of an athlete’s performance
Forecasting about the sales in the domestic market of a product
Estimations of spending in a restaurant
Negotiation Galinsky and Mussweiler (2001) Negotiation task involved the purchase of a pharmaceutical plant
Negotiation about the amount of assigning bonus for an employee
Self-efficacy Cervone and Peake (1986) How many items of the initial task (anagrams and cyclic graphs) they thought
they were capable of solving?

of vodka (Epley and Gilovich, 2001), the length of the Mississippi tions and purchasing decisions (Ariely et al., 2003; Mussweiler et
river (McElroy and Dowd, 2007) and the annual mean temperature al., 2000; Wansink et al., 1998), forecasting (Critcher and Gilovich,
of Germany (Mussweiler and Englich, 2005). Most of these studies 2008), negotiation (e.g. Galinsky and Mussweiler, 2001) and self-
were conducted with university students in laboratory settings and efficacy (Cervone and Peake, 1986) have shown the effect to be very
utilised questions that the students may not have naturally used robust.
for decision making, therefore, their generalizability and validity Research findings from several domains illustrate the robust
can be questioned. However “real-world” judgement and decision influence of anchoring. For instance Thorsteinson et al. (2008)
making tasks such as in legal judgments (Englich and Mussweiler, used both field and laboratory studies to show how anchoring
2001; Englich et al., 2005, 2006; Englich and Soder, 2009), valua- works on performance judgements. Similarly in four experimental
 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42 37

Table 2
Different perspectives to the explanations of anchoring effects.

Perspectives Existing literature Descriptions

Anchoring-and-adjustment Tversky and Kahneman (1974), Epley and Gilovich (2001, 2005) Anchoring effect serves as a result of effortful adjustment
processes, which are insufficient, based on an initially
presented value
Anchor values serve as the reference for people to adjust
the boundary of the range of plausible values for the
question, presuming that the given anchor is more extreme
than the boundary value for the range of plausible answers
Selective accessibility Chapman and Johnson (1999), Mussweiler and Strack (1999, Based on the confirmatory hypothesis testing, individuals
2001b), Strack and Mussweiler (1997) test out the hypothesis that the anchor value is the correct
answer
In doing so, judges look for ways that the answer is similar
to the anchor value and thus activate aspects of target that
are consistent with the anchor to become accessible
Attitude change Blankenship et al. (2008), Wegener et al. (2001, 2010) Anchors could directly serve as a cue or indirectly
influence the information processing that bias judgments
toward the anchors
Low-elaboration anchoring is resulted especially during
non-thoughtful processes; anchors are treated as a “hint”
to a reasonable answer
High-elaborative anchoring involves thorough thinking
that engages judges in more effortful information
processing with existing knowledge and hence activate the
anchor-consistent information that bias judgments

studies Oppenheimer et al. (2008) should that the boundary con- Mussweiler and Strack (1999) however asserted that adjust-
ditions of anchoring effects are very loose with anchors operating ment per se does not account for the strong influence of anchoring
across modalities and dimensions to bias judgement. What is most effect. Strack and Mussweiler (1997) argued that the adjustment
impressive is the number of studies that have demonstrated the process only explains the anchoring effect when the given anchor
robustness of the anchoring effects with very different judgements, is more extreme than the boundary value for the range of plausible
for instance, time estimation (Thomas and Handley, 2008). There answers. Furthermore, Mussweiler and Englich (2005) demon-
have even been electrophysiological studies on the anchoring effect strated that people can be assimilated toward the anchor values
noting how people respond differently when making decisions (Qu in a subliminal manner, implying that the process of adjustment
et al., 2008). may not take place in anchoring.
The literature does indicate that, in decision making, the higher The current dominant view of the anchoring paradigm focuses
the ambiguity, the lower the familiarity, relevance or personal on confirmatory hypothesis testing (Chapman and Johnson, 1999;
involvement with the problem, a more trustworthy source or plau- Mussweiler and Strack, 1999, 2001b; Strack and Mussweiler, 1997;
sible bid/estimate the stronger the anchoring effects (Van Exel et Wegener et al., 2010) and suggests that the anchoring effect results
al., 2006). from the activation of information that is consistent with the anchor
On the other hand, there are various studies demonstrating that presented. It is assumed that judges consider the anchor value to
this influence can be mitigated (Galinsky and Mussweiler, 2001; be a plausible answer and test out the hypothesis that the anchor
LeBoeuf and Shafir, 2009; Mussweiler et al., 2000). However, mixed value is the correct answer. In doing so judges search for ways in
results have been found, which suggests the question: “what factors which their answer is similar to the anchor value, and thus activate
affect the susceptibility to the influence of the anchoring effect?” aspects of the target that are consistent with the first estimate. The
notion of anchoring as an activation process has been empirically
supported by studies such as Chapman and Johnson (1999) and
2. Underlying mechanisms to the anchoring effect Strack and Mussweiler (1997). As a result, it can be argued that
“confirmatory search” (Chapman and Johnson, 1994) and “selec-
In order to understand the question above, first the psycholog- tive accessibility” (Strack and Mussweiler, 1997) contribute to the
ical processes that contribute to the anchoring effect need to be fundamental mechanism that accounts for the anchoring effect.
outlined (see Table 2). Early explanations of the anchoring-and-
adjustment heuristic were provided by Tversky and Kahneman 3. Types of anchors
(1974). They suggested that people make insufficient adjustments
to yield a final estimation based on an initially presented value or It is, however, premature to claim that the confirmatory hypoth-
parameter. In other words, people who are exposed to a higher esis testing model accounts for all of the underlying psychological
anchor make insufficient adjustments downward and vice versa. processes of anchoring. Different mechanisms appear to account
Therefore, estimates are biased toward the anchor values. Strack for the anchoring effect under different contexts. Epley and Gilovich
and Mussweiler (1997) explained: “Anchor values serve as the refer- (2001, 2005) argued that the anchoring effect is generated by mul-
ence point for people to adjust the boundary of the range of plausible tiple mechanisms. Their findings demonstrate that the adjustment
values for the question, presuming that the given anchor is more process comes into play when the anchor values are self-generated;
extreme than the boundary value for the range of plausible answers”. where participants adjust slightly from the values they know to
Based on this concept, estimations made using the anchoring- be close to the right answer. They also found that the mechanism
and-adjustment heuristic lie heavily on the effortful process of of selective accessibility is activated when anchors are externally
adjustment (moving toward the range of plausible answers based provided by an experimenter or some other external source.
on an initial value). Nevertheless, it is argued that the process of Epley and Gilovich (2001) built their argument on the ground
adjustment does not necessarily occur in the standard anchoring that self-generated anchors are known to be a wrong reference
paradigm. from the start. For example, people may know that vodka freezes at
38 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42

less than 32 F, but do not know the exact correct answer. Based on the range of plausible answers (Strack and Mussweiler, 1997). On
the concept of confirmatory hypothesis testing mechanism, there is the other hand, under the selective accessibility model, extreme
no reason for judges to consider whether the self-generated anchor answers would be provided as targets consistent with the anchor
is the correct answer (when it is already known to be wrong). There- becoming activated. Mussweiler and Strack (1999) and Strack and
fore, without confirmatory search, there is no engine activating the Mussweiler (1997) provided support for the view that extreme
accessibility of information that is anchor-consistent. However, an anchors lead to larger anchoring effects.
externally provided estimate may have more weight and validity However, Mussweiler and Strack (2001a) demonstrated that
and can be presumed to be related to the correct answer (Epley differences between high and low anchors occurred only with
and Gilovich, 2001). This acts in accordance with the confirmatory anchor values within the range of plausible answers but not for
search and selective accessibility mechanisms of the confirmatory the implausible or extreme ones. Furthermore, a study by Wegener
hypothesis testing model. It provides an explanation for the find- et al. (2001) found curvilinear effects of extremity for anchor-
ings that the adjustment mechanism accounts for the anchoring ing, which demonstrated that extreme anchors generated smaller
effect when the anchor is self-generated but an externally provided anchoring effects than moderate anchors. These results illustrated
anchor is the factor responsible for the activation of the confirma- that increases in anchor extremity, beyond the range of plausible
tory hypothesis testing mechanism. values, do not increase the anchoring effect. These contradictory
Some empirical findings have demonstrated anchors that have results could be explained in terms of the adjustment mechanism,
informational relevance to the task can lead to anchoring effect. In where people adjust their estimates until they reach a bound-
other words, informational relevance of values may play a role in ary for the range of plausible answers regardless of the extremity
affecting people’s susceptibility to the anchoring effect. For exam- of anchors (Wegener et al., 2001, 2010). The insufficient adjust-
ple, in the legal domain higher damage awards are obtained when ment mechanism then resembles the selective accessibility model,
higher compensations are requested in court (Hastie et al., 1999; where judges adopt a modified version hypothesis testing when
Marti and Wissler, 2000). In addition, the sentencing for rape cases implausible or extreme anchors are encountered. Judges test the
are influenced by the prosecutor’s sentencing demand (Englich et correct estimate which is adjusted to the boundary of the range
al., 2005). Strack and Mussweiler’s (1997) studies on factual knowl- of plausible values instead of to the anchor value itself and thus
edge also demonstrated that anchor values similar or identical in increase the accessibility of knowledge that is consistent with the
judgmental dimensions to the estimates yield significant interac- assumption (Mussweiler and Strack, 1999, 2001a). Although there
tion effect with the anchoring effect. is a different view regarding the underlying processes of anchor-
Englich et al. (2006) found empirical support which explains the ing effect between the two proposed mechanisms, they share the
above finding using the selective accessibility model. They demon- same idea regarding anchor extremity. The two mechanisms propose
strated that participants who were exposed to high anchor values that anchor extremity beyond the range of plausible answers do not
responded faster in categorizing incriminating arguments than increase the anchoring effect.
those presented with low anchor values, indicating that anchor- Wegener et al. (2001) proposed a new perspective on anchoring
consistent information is activated by relevant anchors. These based on the processes of attitude change. Wegener et al. (2001)
studies provide support for the argument that the anchoring effect found a curvilinear effect for the extremity of anchors. The adjust-
is vulnerable to the relevance of the reference value in the task. ment mechanism and the selective accessibility model account for
Some research, however, has found that anchor values that are the increasing anchoring effect with increasing anchor extremity
uninformative to the estimates also yield an effect in judgmental within the range of plausible answers. However, the attitudi-
decisions. For example, Tversky and Kahneman (1974) randomly nal approach explains the findings beyond the range of plausible
generated the anchor values by spinning a wheel of fortune. Fur- anchors. It argues that when values are too extreme, people gener-
thermore, participants in Englich et al.’s (2006) study randomly ate counterarguments to question its validity or ignore the values
acquired the anchors by throwing a set of die. In addition, Critcher completely, therefore leading to less attitude change (Wegener
and Gilovich (2008) found that estimations of an athlete’s per- et al., 2001). In conjunction with the extremity of anchors, the
formance could be anchored by the number on his jersey; sales attitudinal approach implies that implausible or extreme anchors
forecasting were influenced by a product’s model number; and may lead to smaller anchoring effect being generated. Wegener
the estimations of spending in a restaurant were affected by the et al.’s (2001) findings suggested that perceptions of plausibility
name of the restaurant (“Studio 17” or “Studio 97”). These stud- mediate the moderating effects of extremity, which supports the
ies demonstrate that irrelevant anchors still induce an anchoring attitude change perspective in anchoring. The adoption of the atti-
effect. Englich and Mussweiler (2001) and Englich et al. (2006) tude change perspective in order to explain extremity in anchoring
tested the magnitude of the anchoring effect with anchor relevance, demonstrates part of the attitudinal processes involved in anchor-
but failed to find an effect. This illustrates that assimilation to the ing. This opens up a new area of research which aims to explain
anchoring effect in judgment is independent of the informational the robust influence of the anchoring effect since no single mech-
relevance of the anchors. The comparison with random anchor anism can fully account for this phenomena. Mixed results have
value activates the accessibility of anchor-consistent knowledge been found demonstrating the effect of extremity and plausibility
and thus biases judgments. In short, irrelevant anchors produce on anchoring effect. Nonetheless, it is clear that the anchoring effect
similar effects in judgmental decisions in comparison to those of can be demonstrated in various judgment and decision tasks and
informational relevance anchors. both plausible and implausible anchors yield an effect.
The ubiquitous influence of anchoring effect can be due to the
extremity of anchors. Some argue that implausible or extreme
anchors lead to a larger anchoring effect compared to plausi- 4. Mood of participants
ble anchors (possible values for the target category) (Strack and
Mussweiler, 1997; Wegener et al., 2010). The anchoring-and- After considering the possible factors related to anchor val-
adjustment perspective, argues that people adjust their boundaries ues, researchers in the field have turned to potential human
of estimations according to the initial values presented. This leads components, which may contribute to the susceptibility to the
to the prediction that increases in anchor extremity should bring anchoring effect (Table 3). Drawing from the perspective of atti-
about larger anchoring effects under conditions where the given tude change, anchors serve multiple “roles”. They can be a simple
anchor value is always more extreme than the boundary value for cue directly influencing decisions, engage in effortful process-
 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42 39

Table 3
Human factors considered in anchoring literature.

Human factors Research Findings

Mood Bodenhausen et al. (2000), Englich and Soder Significant results of affective factor on anchoring effects
(2009) Participants in sad mood are more susceptible to the heuristic bias
of anchoring in comparison to their counterparts in neutral or
happy mood
Knowledge/experience/expertise Wilson et al. (1996) Knowledgeable people are less influenced by anchors presented
Englich and Mussweiler (2001), Englich and Significant results of anchoring effect on individuals with
Soder (2009), Englich et al. (2005, 2006), knowledge and experience in the tasks
Mussweiler et al. (2000, Study 1), Northcraft
and Neale, 1987
Motivation/incentives for accuracy/forewarnings Epley and Gilovich (2005) Forewarning is effective to diminish the effects of anchoring, only
with self-generated anchors
LeBoeuf and Shafir (2009) Forewarnings about accuracy raised non-significant result to
eliminate the anchoring effect. However, specific warning about
insufficient adjustment reduced anchoring effect
Tversky and Kahneman (1974), Wilson et al. Anchoring effects are not eliminated even with incentives and
(1996) forewarnings
Personality Eroglu and Croxton (2010) Participants with high conscientiousness and agreeableness and
low extraversion are more susceptible to the anchoring effects
McElroy and Dowd (2007) High openness to experience individuals is more influenced by the
anchoring effect
Cognitive ability Bergman et al. (2010) Anchoring effect decreases with higher cognitive ability
Oechssler et al. (2009) No significant results of cognitive ability on the anchoring effect

ing, be similar to selective accessibility mechanism or to the bias provided anchors. This is supported by Chapman and Johnson
judgment (Blankenship et al., 2008; Wegener et al., 2010). The atti- (1994), who illustrated that a smaller anchoring effect was gen-
tudinal approach incorporates both thoughtful and non-thoughtful erated by those with a high certainty about an answer. Wilson
processes in accounting for the anchoring effect. Following this et al. (1996) discovered that knowledgeable people are less influ-
approach, it is suggested that susceptibility to anchoring effect is enced by anchors presented. However, previous studies in the field
influenced by affective factors. Emotions are usually used explicitly have provided empirical evidence demonstrating that decisions
as information in judgment situations, or they can indirectly influ- by expert participants in the judgmental domains also show an
ence decision making by changing how people process information anchoring effect. For instance, car experts (car mechanics and car
(Englich and Soder, 2009). Several studies have demonstrated that dealers) with all the necessary information evaluated the value
individuals in happy moods often process information relying on of a car based on the anchors provided (Mussweiler et al., 2000),
the use of superficial or heuristic strategies, whereas information is estate agents made pricing estimations biased toward the anchor
processed more efficiently when judges are in a sad mood (Schwarz, values (Northcraft and Neale, 1987) and experienced legal pro-
1990, 1998, as cited in Englich and Soder, 2009). However, an excep- fessionals, who have higher certainty ratings than non-experts,
tion to this rule is judgmental anchoring. Bodenhausen et al. (2000) were significantly influenced by irrelevant anchors on their sen-
and Englich and Soder (2009) found that participants in a sad mood tencing decisions (Englich and Mussweiler, 2001; Englich et al.,
were more susceptible to the heuristic bias of anchoring in com- 2005, 2006). These results imply that expertise does not significantly
parison to their counterparts in a neutral or happy mood. From reduce the assimilative bias in decisions that affect inexperienced
the attitude change perspective, sad mood causes people to engage laypeople. An explanation for these findings may be drawn from
in more effortful processing, where people interpret information the high-elaboration anchoring process, where judges elaborate
through elaboration on their existing knowledge and determine the and compare the reference with their existing knowledge and
claim to be acceptable or unacceptable (Blankenship et al., 2008). engage in more thorough information processing, hence activate
The conception of elaboration in contemporary theories of attitude the accessibility of anchor-consistent information and bias judg-
change is very similar to the mechanism of confirmatory hypothe- ments. Furthermore, the findings of higher certainty ratings by the
sis testing in anchoring (Wegener et al., 2010). Following the trend experts also indicated that they may mistakenly see themselves
of argument proposed by the selective accessibility mechanism, as less susceptible to the anchoring effect. This supports Tversky
sad mood induces judges to engage in more thorough information and Kahneman’s (1974) assertion that “the subjects state overly
processing (Englich and Soder, 2009) and hence activate the con- narrow confidence intervals which reflect more certainty than is
firmatory search for anchor consistent information. This suggests justified by their knowledge about the assessed quantities” (p.
that a happy mood may lead to judgment that is uninfluenced by the 1129). Confidence and certainty about their expertise could lead
robust influence of anchoring. Further work need to be undertaken the participants to make insufficient adjustment for the estimates
to understand mood effects however. and result in assimilation toward the anchors.

5. Knowledge of participants 6. Rewards for accuracy/motivation

The effect of mood on magnitude of anchoring, however, does Following the attitude change perspective proposed by
not influence all individuals at the same level. Research by Englich Wegener et al. (2001, 2010), the elaboration-based approach
and Soder (2009) demonstrated that emotions only have an effect has been widely adopted to explain the robust and pervasive
on the magnitude of anchoring with non-experts. They found that influence of anchoring. Low-elaboration anchoring results from
experts are vulnerable to the anchoring effect regardless of their non-thoughtful processes, where the motivation and the ability to
moods. One could argue that judges with high expertise should make the correct judgment is lacking, and therefore, the anchors
have greater knowledge, more experience and less uncertainty are treated as a “hint” to a reasonable answer (Schwarz, 1994, as
in making relevant decisions, thus less is assimilated from the cited in Wegener et al., 2010) without considering the relevance
40 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42

and plausibility of the anchors. Hence, it is indicated that a motiva- empirical evidence to conclude about the effect of personality on
tion for accuracy may have an effect on the magnitude of anchoring anchoring, therefore, further studies are needed to investigate the
effect. However, Tversky and Kahneman (1974) offered payoffs for relationship between these variables.
accuracy to motivate participants in order to reduce the anchoring Drawing from the theory of cognitive function emphasized by
effect, but to no effect. Moreover, findings by Wilson et al. (1996) the dual-process model (Kahneman, 2003; Stanovich and West,
demonstrate that anchoring effects are not eliminated with incen- 2000), heuristics are characterized as the result of System 1, which
tives and forewarnings. However, some studies have found the is automatic, fast, effortless and often emotionally charged, and
effectiveness of forewarning in diminishing the effects of anchoring therefore, difficult to control or modify. According to the dual-
when warnings about insufficient adjustment (LeBoeuf and Shafir, process model, anchoring incorporates the descriptions above and
2009) and self-generated anchors are given (Epley and Gilovich, the main function of this mechanism serves as a universal influ-
2005). These findings suggest that motivation or warning may not ence biasing judgments of individuals. However, it is undeniable
help avoid the influence of anchoring. This could be explained that anchoring does not affect each individual at the same level.
as a result of high-elaborative anchoring, where motivation and This is where System 2 comes into play. System 2, is a slower, serial,
thorough thinking engage the judges in more effortful informa- effortful and more likely to be consciously controlled mechanism
tion processing with existing knowledge and hence activate the (Kahneman, 2003; Stanovich and West, 2000). The operation of Sys-
anchor-consistent information that bias judgments. Findings have tem 1 could sometimes be overridden by System 2 and results in
demonstrated that both thoughtful and non-thoughtful processes individual differences in the anchoring effect (Stanovich and West,
with low or high level of motivation are susceptible to the robust 2008). This then raises the issue of the factors that affect System 2
influence of anchoring effect even when people are explicitly trying which override System 1, which may in turn provide greater insight
to avoid them. into the anchoring effect. Individuals are subjected to psycholog-
ical constraints such as the resource-limited nature of the human
7. Individual differences cognitive apparatus, which leads to computational limitations and
further behavioural biases in judgmental decisions.
Individual differences are the different responses generated by One of the factors that can be investigated is cognitive abil-
an individual toward specific events or circumstances in a way ity or more specifically, analytic intelligence. It was predicted by
that is different from other people on a regular basis (Brandstätter, Stanovich and West (2008) that there should be a negative rela-
1993). Personality is one of the individual difference variables that tionship between cognitive ability and biased responding. This
affects one’s performance and more specifically, the cognitive pro- prediction is parallel to the findings of Bergman et al. (2010),
cessing in judgmental decisions. There is limited research on the which investigated the relationship between cognitive ability and
relationship between personality and the anchoring effect. Pre- anchoring effect in economic decisions. They found that anchoring
vious research has focused on groups of subjects but neglected decreases with higher cognitive ability. However, anchor values are
individual differences variables because people tend to look for a still sizeable and yield a significant effect in the high cognitive abil-
universal rule that would predict reactions or behaviour. Most of ity group. On the other hand, results by Oechssler et al. (2009) again
the research in the field related to personality has focused on the illustrated the ubiquitous influence of anchoring, where cognitive
most widely tested and well-regarded Big-Five personality traits, ability serves as a moderator to biases in decision making, such as
namely extraversion, neuroticism, conscientiousness, agreeable- conjunction fallacy and conservatism in probability updating, but
ness and openness (e.g. Eroglu and Croxton, 2010; McElroy and it does not play a role in the anchoring effect. More reflective deci-
Dowd, 2007). sion making does not seem to diminish the effect of anchoring. This
Based on the cognitive-experiential self-theory (Epstein, 1994), lends support to Stanovich and West (2008). Although results from
it is assumed that information processing operates in two paral- Oechssler et al. (2009) were not significant, the participants with
lel systems. One is rational, analytic, conscious and rule-based; higher cognitive reflective scores did seem to be more suscepti-
the experiential system. On the other hand, is more intuitive, ble to anchoring. Oechssler et al. (2009) argued that participants
emotional and outcome oriented. Study 1 by Shiloh et al. (2002) with higher cognitive abilities – might be more likely to under-
supports Epstein’s (1994) view that normative-statistical responses stand the psychology of the questionnaire and hence estimate their
are related to rational thinking style; while experiential-intuitive answers based on the provided anchor, however, this needs fur-
system is subjected to heuristic processing. ther investigation. Methodologically, the cognitive reflection test
Literature reviews that investigated the effect of personality (CRT) developed by Frederick (2005) which differentiates between
traits on anchoring, demonstrated that participants with high con- impulsive and more reflective decision making, and has high cor-
scientiousness and agreeableness and low extraversion (Eroglu relation with cognitive ability (Spearman correlation = 0.637) was
and Croxton, 2010), as well as with high openness to experience used to examine the relationship between cognitive ability and
(McElroy and Dowd, 2007) are more susceptible to the anchoring anchoring effect (e.g. Bergman et al., 2010; Oechssler et al., 2009).
effect. These results could be explained by the selective accessibil- However, it has been criticized by Bergman et al. (2010) as a bad
ity mechanism (Mussweiler and Strack, 1999) and the attitudinal predictor for anchoring due to the limited dimensions of cognitive
approach (Wegener et al., 2001) to the anchoring effect. Individuals skills covered. It may, therefore, be suggested that anchoring effect
with high conscientiousness engage in more thorough thought pro- involves not only the difference between impulsive and reflective
cesses before judgments are made, those with high agreeableness judgments but also more general cognitive skills in reasoning and
take the provided anchors seriously, high openness to experience information processing. Nonetheless, there are mixed results found
influence individuals who are more sensitive to anchor cues. These on the influence of cognitive abilities and anchoring effect. It seems
attitudes lead to the activation of confirmatory search and selec- that researchers have failed to identify any cognitive or trait vari-
tive accessibility mechanisms of anchoring. Furthermore, research ables that have a systematic and explicable effect on anchored
on the relationship between participants’ moods and the anchor- decisions.
ing effect have demonstrated that sad mood leads participants to
engage in more effortful information processing which is more 8. Information processing styles
prone to anchoring effect (Bodenhausen et al., 2000). Therefore one
could argue that individuals with low extraversion may be more The attitudes and persuasion perspective on anchoring pro-
susceptible to the anchoring effect. However, there is insufficient posed by Wegener et al. (2001) have suggested that both effortful
 A. Furnham, H.C. Boo / The Journal of Socio-Economics 40 (2011) 35–42 41

and non-effortful information processing can lead to the assim- They discovered that considering the opponent’s best alternative
ilation of answers toward anchor cues. This proposes that the to a negotiated agreement (BATNA), which is the lower boundary
influence of the anchoring effect could be due to the thinking styles value for an agreement that should not settle, the opponent’s reser-
adopted by judges in decision making. Low-elaboration anchor- vation price or the own target can eliminate the influence of the
ing results especially during non-thoughtful processes, where the first offer. These are only beneficial if the negotiator was aware of
motivation and the ability to make the correct judgment is lack- the influence of anchor values and, therefore, likely to compensate
ing, and thus judges treat the anchors as a “hint” to a reasonable for the assumed effect. However, negotiators may be subliminally
answer (Schwarz, 1994, as cited in Wegener et al., 2010). On the affected by an anchor value and assimilate their judgments toward
other hand, high-elaborative anchoring, where motivation and the initial reference. Furthermore, pricing policy, or more specifi-
thorough thinking engages judges in more elaborate information cally reference pricing, has been adopted by retailers as a marketing
processing with existing knowledge, and activation of the anchor- practice to affect consumer’s purchase decisions based on the con-
consistent information that bias judgments (Wegener et al., 2010). cept of anchoring. Reference prices are the anchor values presented
This is empirically supported by Blankenship et al. (2008), who for consumers to judge the offers.
demonstrated that participants engaged in deeper thinking and A meta-analysis conducted by Biswas et al. (1993) on 12 out
elaborated more on background knowledge to generate answers of 26 relevant studies found significant effects of reference pricing
when their cognitive load was low (leading to high ability to think). on consumer’s value estimations in most of the studies. Moreover,
Blankenship et al. (2008) further discovered that an individual’s research by Wolk and Spann (2008) investigating the mechanism of
information processing ability has different consequences on the online auction, a popular manner of purchasing among consumers,
lasting impact of anchoring. These findings suggest that anchor val- indicated that reference pricing affects consumers’ bid values and
ues have a more durable influence and more resistant to future purchase intentions. These demonstrate the robust influence of
change when initial anchored judgments are made under low level anchoring in practical decision situations, which affects the ben-
of cognitive load, where an elaborative information processing was efits and rights of an individual. Therefore, further research is
operating. In short, different levels of information processing across needed to investigate the factors that may reduce the suscepti-
conditions generate different consequences of the anchors. This bility towards an initial value in order to protect decision makers
outcome may be manipulated and may affect the applications of from exploitations of the pervasive psychological trick in decision
anchoring effect in judgmental decisions. making-anchoring.
Clearly sales individuals and organisations have an understand-
ing of the anchoring effect which plays a role in pricing and
9. Applications negotiations. Both, no doubt, experiment with using anchors to
encourage others to make decisions though little work has been
Research in the field demonstrates that anchoring is a perva- done to uncover their “lay theories” or data on the subject which
sive and robust effect in human decisions regardless of factors may inform academic research and practice.
such as types of anchors, relevance of anchor cues, expertise,
motivation and cognitive load. Therefore, can anchoring effects 10. Conclusion
be reduced or prevented? Based on the selective accessibility
model, Mussweiler et al. (2000) argued that consider-the-opposite There is now nearly 40 years worth of research on the anchoring
strategy could mitigate the magnitude of the anchoring effect. effect which has proved to be extremely robust. It can be demon-
The consider-the-opposite strategy requires judges to provide an strated over a wide array of decisional tasks, with different groups
anchor-inconsistent argument that may increase the accessibility and in different settings. It is unusual in experimental settings not
of anchor-inconsistent knowledge leading the final judgment to to be able to demonstrate it. There exist different, but not contra-
be unbiased. It sounds logical and practical, however, studies have dictory models, to account for the process. Anyone working in the
found that the effects of anchor-inconsistent argument on debias- area become aware of the fact that there exist considerable indi-
ing the effect of anchoring to be ineffective (Mussweiler et al., 2000). vidual differences in the extent to which individual judgements
In addition, studies have demonstrated that judgmental anchoring are effected by anchors. Thus an interest in affective, background,
has indeed durable effects, lasting up to one-week (Blankenship et motivational and trait correlates of anchoring decisions. The work
al., 2008; Mussweiler, 2003). These findings suggest that the influ- in this area, particularly cognitive ability (intelligence), personality
ence of anchoring is exceptionally robust, pervasive and ubiquitous. trait and mood, has yield contradictory and equivocal findings.
In their popular book on behavioural economics Belsky and The literature on the effects of specialist knowledge and experi-
Golivich (1999) warn people that they may be prone to confirma- ence is more consistent and in line with common-sensical beliefs.
tion biases and anchoring if they make spending and investment However the work investigating the effects of motivation (i.e.
decisions without research. They are especially loyal to certain incentives) and forewarnings remains inconsistent. This suggests
brands/investments for the wrong reasons; they find it hard to see that individual differences and situational factors play only a small
investments for less than they paid for them and they rely on the role on anchored judgements. Future work may take a more social
sellers price rather than assessing the value themself. They advise approach by considering how anchoring effects work on group (vs.
people to avoid the pitfall of anchoring by broadening their board of individual) decisions. More importantly given the obviously wide-
advisors; doing more thorough research before making economic spread knowledge of the anchoring effect by sales and marketing
decisions; look at trends, be realistic and take the longer view; and people and organisations as well as those in negotiations it would
show a little more humility when it comes to one’s own judgement. benefit academic research by examining “real-world data” as well
Recently, the practical applications of anchoring received great as the personal theories of those whose livelihoods depend in part
attention in the business world. For example, in the negotiation on the anchoring effect.
process, an initial offer may serve as an anchor to assimilate final
judgment toward it (Galinsky and Mussweiler, 2001). Based on
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