You have probably heard that it is best to drop the first bid in a negotiation to get as much advantage as possible. This is because of the anchoring effect, which means that people make decisions relying on the first piece of information that they get. This piece of information is called the anchor and sets the bar for future discussion. In the negotiation example, the person you are negotiating with will relate her or his next proposal to your proposal and unconsciously adjust their estimate. In this case, the anchor is monetary and directly related to the discussion - but the value can also be completely irrelevant to the situation itself! The mere exposure to an anchor can affect people's next actions. The anchoring effect is a cognitive bias that affects how we interpret information and act upon it.
Psychologists Amos Tversky and Daniel Kahneman have researched human judgement and decision-making for over 20 years. They have published several articles on cognitive biases, one of them describing the anchoring effect. The effect can be illustrated in one of the experiments that Tversky and Kahneman conducted. The subjects first got to see a number determined by a spinning wheel. Then, they had to estimate the percentage of African countries in the United Nations. Results showed that the random number had a clear impact on the estimates - those who got a lower number gave much lower estimates than those who got a higher number. This is even though the anchor was random and unrelated to their task.
So, we have talked a bit about numbers as anchors - but it does not stop there. An anchor can be a belief that we hold on to and reconsidering our point of view can be hard because we are anchored by it. First impressions are a form of anchoring. For instance, it is common that students are evaluated based on their ability when they first come to school and categorised as either high-performing or low-performing from the beginning. This initial anchor sets the teacher’s expectations for how the students will perform in the future, making it difficult to get rid of their labels.
Anchors can be incredibly powerful when it comes to debates and discussions - whether they are used deliberately or not. You have probably been in a meeting that revolved around one single idea, probably the first thing someone dropped because they had it on top of mind. An initial anchor like this can steer the whole discussion, and the team risks getting caught up in details or missing other valuable perspectives. The anchor takes time from the rest of the meeting and can affect how an idea is evaluated. If you start by problematizing a suggestion, the positive aspects might get overshadowed. The whole group will then have a bias when they continue discussing the idea.
When building teams or organizations, it is common to check the “Team Pulse” to see the engagement of the group. This template was produced a while ago and is used by many Mentimeter users. I (Niklas) have used it quite a lot with success. I often tweak the content based on need as the team grows and faces new challenges. When I gather the team for a weekly meeting, I make sure that I do the team pulse before we jump into the agenda to avoid accidental anchoring. Talking about the topics may influence how people respond to the survey, and I want the feedback from the team to be as honest as possible.
At the same time, people sometimes need to be reminded of recent projects to get a good sense of what they have accomplished as a team. In my experience, result-oriented high performers tend to forget the achievements they have done. They are already on the next task and can happen to diminish their own performance (you can read more about this in the article about the Dunning-Kruger effect). Sometimes, I consciously remind them of things we have done recently to help them recognize their accomplishments. Is this anchoring? Yes, in some way it is - but I try not to comment on things positively or negatively. Remember that cognitive biases are not necessarily good or bad by themselves. They are harmful when they lead to logical fallacies and wrong decisions, and as with all matters of leadership, you have to be conscious when dealing with them.
Big thank you to Diana Diez who co-wrote this article.
Darley, J. M., & Gross, P. H. (1983). A hypothesis-confirming bias in labeling effects. Journal of Personality and Social Psychology, 44(1), 20–33. https://doi.org/10.1037/0022-35126.96.36.199
Tversky, A.; Kahneman, D. (1974). "Judgment under Uncertainty: Heuristics and Biases". Science. 185(4157): 1124–1131. Bibcode:1974Sci...185.1124T. doi:10.1126/science.185.4157.1124
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