Question

The anchoring and adjustment heuristic come in to play when consumers base their predictions on the quickness and ease with which a particular example of an outcome comes to mind. Group of answer choices True False

Answer 1

Answer:

The correct answer is False.

Explanation:

It is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information that is offered when making decisions: the "anchor." Also known as the "focus effect." During decision making, anchoring occurs when people use an initial piece of information to make subsequent judgments. Once the anchor is fixed, the rest of the information is adjusted around the position of the anchor incurring a bias.

For example, the starting price offered for a used car sets the standard for the rest of the negotiations, making prices lower than the starting price seem more reasonable even though they are still higher than what the car is really worth. In the same way, if you ask about the population of Ukraine: "Is it greater or less than one hundred million people?", The answers will vary, but in general they will be somewhat less than this number. However, if the question were: "Is the population of Ukraine more than or less than twenty million people?" The answers will vary, but the average of answers will not change much from the initial anchor. That is, it starts from the "anchor value" and an adjustment is made ... which is usually in the right direction but of insufficient magnitude.