write:but they were wrong: theanchoring effect was 41%. Indeed the professionals were almost assusceptible to anchoring effects as business school students with no real-estate experienc

but they were wrong: theanchoring effect was 41%. Indeed
the professionals were almost assusceptible to anchoring effects as business school students with no real-estate experience
whose anchoring index was 48%. The only differencebetween the two groups was that the students conceded that they wereinfluenced by the anchor
while the professionals denied that influence.Powerful anchoring effects are found in decisions that people makeabout money
such as when they choose how much to contribute al.lsdenied to a cause. To demonstrate this effect
we told participants in theExploratorium study about the environmental damage caused by oiltankers in the Pacific Ocean and asked about their willingness to make anannual contribution “to save 50
000 offshore Pacific Coast seabirds fromsmall offshore oil spills
until ways are found to prevent spills or requiretanker owners to pay for the operation.” This question requires intensitymatching: the respondents are asked
in effect
to find the dollar amount ofa contribution that matches the intensity of their feelings about the plight ofthe seabirds. Some of the visitors were first asked an anchoring question
such as
“Would you be willing to pay $5…
” before the point-blankquestion of how much they would contribute.When no anchor was mentioned
the visitors at the Exploratorium—generally an environmentally sensitive crowd—said they were willing to pay$64
on average. When the anchoring amount was only $5
contributionsaveraged $20. When the anchor was a rather extravagant $400
thewillingness to pay rose to an average of $143.The difference between the high-anchor and low-anchor groups was$123. The anchoring effect was above 30%
indicating that increasing theinitial request by $100 brought a return of $30 in average willingness topay.Similar or even larger anchoring effects have been obtained innumerous studies of estimates and of willingness to pay. For example
French residents of the heavily polluted Marseilles region were asked whatincrease in living costs they would accept if they could live in a lesspolluted region. The anchoring effect was over 50% in that study.Anchoring effects are easily observed in online trading
where the sameitem is often offered at different “buy now” prices. The “estimate” in fine-artauctions is also an anchor that influences the first bid.There are situations in which anchoring appears reasonable. After all
itis not surprising that people who are asked difficult questions clutch atstraws
and the anchor is a plausible straw. If you know next to nothing