Anchoring bias: The invisible hand behind decision-making

Anchoring bias is a cognitive phenomenon where individuals rely heavily on the first piece of information they receive, known as the anchor, which influences subsequent decisions and judgments. This bias significantly affects various aspects of decision-making, from marketing and pricing strategies in product management to effort estimations and market analysis. In everyday scenarios, anchoring can be observed in product pricing, salary negotiations, budgeting, and first impressions, where initial information sets a reference point that often skews perception. While it is challenging to completely avoid anchoring bias, acknowledging its presence and employing strategies such as gathering diverse insights, setting counter anchors, and breaking down complex decisions can help mitigate its impact. Understanding and leveraging anchoring bias can be beneficial in fields like product development, marketing, and negotiations, where it can be used to steer user interactions and enhance decision-making processes.