Anchoring Bias is a Cognitive Bias in which an individual’s decision is influenced or depends on the first piece of information or initial information received.
A common susceptible candidate to the anchoring bias are physicians when diagnosing patients where the initial impression about the patient often create an anchoring point. This may also lead to incorrect assessment of the patient’s problem.
Tversky and Kahneman in their research concludes the cause of anchoring-as-adjustment. After an anchor is set, people adjust away from it to get to their final answer; however, they adjust insufficiently, resulting in their final guess being closer to the anchor than it would be otherwise.
Tversky, Amos; Kahneman, Daniel (1992). “Advances in prospect theory: Cumulative representation of uncertainty”.Journal of Risk and Uncertainty. 5 (4): 297–323.
Anchoring Bias influences our decision while purchasing new things like car, house etc. Someone tells you that a 5 year old sedan cost X and you do some research and find out that the rate is nearly around +/- 5% of X. So, you make up your mind accordingly and when you get a car at that price you are biased and is willing to pay and buy the car. In fact, you go on with your decision and purchase the car. You fail to look more options/ deals which may latter affect you negatively.
Anchoring Bias has a powerful impact on the various decisions we make, for which we must give it a due diligence.