Many psychological tricks are being used to maximize profits. Anchoring in behavioral economics is being used when people are shown unrelated information to form their first impressions in order to influence their decision. If somebody were to tell you a random number before revealing a price for something, that number would be considered an anchor point.
1st study: Unrelated numbers can determine the price you'll pay for something
A study from 2003 explored how asking people to write down the last 2 digits of their social security number can influence the price they would pay for certain items. 55 people participated in the study.
- In the beginning, the researcher presented a few items that included some wine bottles and chocolate to the participants.
- Then participants were given a form to fill in which they had to enter the last 2 digits of their social security number and write "yes" or "no" depending on if they would agree to buy the listed item for the social security digit number that they wrote down.
- Then participants were asked to write down the maximum price they would pay for each item.
The results of the study showed that people were willing to pay more than 2 times more for the items when their social security digits were in the top 20 percent compared to the people that had their social security digits in the lowest 20 percent.
This study shows how random, unrelated numbers can influence the way we value things if they are set as an anchor point before we make a decision.
2nd study: An anchor can influence how you evaluate someone's performance
A study from 2008 had 219 participants rate their instructor on various categories (enthusiasm, knowledge of the course material, etc.) while some of them were being presented as an anchor to sway their opinion. Here is how the experiment looked like:
- Participants were university students and they had to rate their instructor on a form on five performance dimensions.
- Some participants were given an example form that had all the ratings marked as perfect - this created an anchor point for those students.
The results of the study showed that participants that had a positive anchor point, had rated the instructor's performance about 15 percent higher overall. It shows how even the simplest things like showing a filled form with the best answers can affect people's choices in a real-life scenario.
3rd study: How an anchor can influence property valuation results
Property valuation requires a lot of factors to be analyzed and rated so it can be rather surprising to see that an anchor can influence the outcome.
A study from 2017 explored this idea in an interesting setting - an exam in which more than a hundred real estate education students had to evaluate a property.
- Before doing the task, it was mentioned to students that the owner of the property either expects the property to be valued with a low number or a high one - this serves as an anchor point. In reality, this number shouldn't influence the valuation.
- Then students had to do various complex calculations to evaluate the property and write down the final value for the property.
The results of the study showed that participants that were shown high number anchor, rated the value of the property more than 10 percent higher compared to students that had received a low number anchor.
These studies show that even small things that might seem unrelated can influence our choices and perspectives. Being aware of such effects can help us understand ourselves and others better.