Distortions of Reality: Anchoring and Availability

Influence of arbitrary data on value judgments.

Another deep-seated cognitive distortion is the anchoring bias, which demonstrates our vulnerability to completely irrelevant numerical data.

In one famous experiment, participants were asked to write down the last digits of their ID and then estimate the year of construction of a famous historical monument.

Surprisingly, those who possessed IDs with high endings calculated much more recent dates, while those with low numbers projected older dates.

Even though the ID number bears absolutely no relation to the historical event, the brain uses that first number provided as a mental anchor to formulate its response.

This phenomenon explains why we accept high prices on modern technological items; the high cost set by the first manufacturers on the market established itself as the norm, conditioning us to perceive those rates as reasonable when comparing any new product.

Alteration of risk perception due to information saturation.

Our mind also falls victim to availability bias, a mechanism that drastically alters our perception of risk based on the ease with which we remember an event.

When we are exposed to a constant bombardment of news about a specific tragic event, our alertness is irrationally triggered.

For example, if the news reports the collapse of a building, many people will begin to feel an unwarranted panic upon entering any tall structure.

Likewise, after a media accident, the population will avoid using the train, preferring to travel by car.

However, if we consult statistical data, we will discover that rail transport is still infinitely safer than traveling on highways.

Being saturated with information about a recent and highly visible danger, we overestimate its real probability of occurrence, completely forgetting the daily and statistically more lethal risks to which we have already become desensitized.

Summary

Anchoring demonstrates how completely irrelevant numbers condition our future valuations. Setting a high initial price alters the perceived value of any product offered.

The availability of recent news dramatically increases our level of alertness. Unlikely but media-worthy events provoke irrational fears that strongly modify consumer behavior.

Initial impressions and easily remembered data dominate our minds. Proper management of visible information prevents disproportionate reactions and facilitates much better orientation.