You’re Making This Critical Business Mistake – The Anchoring Effect EXPOSED!
What Is Anchoring and Adjustment?
Anchoring and adjustment is a process in which a person's first thoughts and reactions are based on one piece of information and then change based on that one piece of information. The anchoring and adjustment heuristic talks about situations in which a person uses a specific goal number or value as a starting point, which is called an anchor, and then adjusts that information over time until it reaches a good value. Most of the time, these changes aren't enough and stay too close to the original anchor. This is a problem when the original anchor is very different from the real answer.
Understanding Anchoring and Adjustment
Behavioral finance calls anchoring a cognitive bias in which people fixate on a goal number or value, usually the first one they get, like an expected price or an economic forecast. Anchoring is different from the conservative bias, which has similar effects but is based on how investors relate new information to old information. Instead, the conservative bias is based on how investors relate new information to old information. Anchoring and adjustment can be lessened by giving new information careful thought to see how it affects the original forecast or opinion. However, the traits of the person making the decision are just as important.
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Content Creator: 📝 Aysun Ibadova, Kamran Tagiyev
Voiceover author: 🎙️ Jeremy G.
Animation author: 🎨 Esmira Guliyeva
Sound editor: 🔊Aysun Ibadova
Project manager: 📊 Kamran Tagiyev
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