Anchoring Effect as A Cognitive Bias: An Example of a Classroom Experiment

Abstract

Over the last decades, standard economic assumptions are questioned due to some empirical violation examples of the rationality principle in economic theory. Behavioral economists suggest that it is more realistic to call individuals and firms "bounded rational" than rational to solve this inconsistency. Hence, one of the primary sources of these rationalities comes from cognitive biases and heuristics, according to many psychologies and behavioral economics studies. It is assumed that anchoring effect is one of the most robust cognitive biases since it might occur without the individual's awareness. In this study, anchoring effect as a cognitive bias is analyzed with its theoretical and psychological background. In the last section of the study, the findings of a class experiment are presented and discussed. According to the results, when the anchoring effect increases, the anchors' impact on the mean estimations of the subjects also increases. Moreover, when the subjects are explicitly directed to the anchor value, anchoring effect is more influential than a regular incidental anchoring effect. Hence, increases in anchoring effect result in a larger influence on the estimations of the subjects.