Alignment
Is Anchoring Wrecking the Way you Negotiate?
April 21, 2016
Jordan Early
2 minutes

I’ve got a question… Is the population of Myanmar greater or less than than 17 million?

Without using google, I want you to decide which option you think is correct. Once you’ve decided, I want you to estimate the population of Myanmar in your head to the nearest million people.

We’ll come back to that example in a moment, but for now I want to discuss ‘anchoring’ and how it plays havoc with the decisions we make and the way we negotiate.

You might think that the way you arrive at a decision is to process all the available information in a rational manner and come up with a point of view that you perceive to make logical sense. In reality, the opposite can be true.

During the decision making process or in a negotiation, there are a number of external factors that impact and disrupt our thought making process. One such disruption or cognitive bias is that of anchoring. Anchoring occurs when our minds subconsciously grabs onto the first piece of information available to us and put an increased weight on the importance of this information. It has the potential to vastly change our opinion of what is a ‘fair or good’ outcome.

We seem to assume that any number presented, no matter how arbitrary, falls within the zone of possibility for the question we are trying to answer, and hence we attach added importance to this figure and ‘anchor’ our response to it.

The Wheel of Fortune.

One of the first experiments used to point out this bias was conducted back in 1974 by the United Nations. In the study, a sample of people spun a wheel numbered 1-100 (similar to a wheel of fortune wheel), the wheel was weighted so that only the numbers 10 and 65 could be spun. Once the participant received their number, they were asked if the percentage of African countries in the United Nations was higher or lower than the number they had spun.

Once they had completed this task, participants were asked to estimate the percentage of African countries that were a part of the United Nations. Participants who spun the number 10 guessed (on average) that 25% of African countries were in the United Nations, those who spun 65 guessed that 45% of African countries were a part of United Nations. In essence the low anchor of 10 lowered people’s estimation and the high anchor of 65 increased estimates.  

Despite the fact that the wheel generated number was completely random and had no direct link to the question being asked, participants subconsciously grabbed onto this number.

So the question has to be asked, are you a victim of anchoring? If you’re discussing your bonus and your boss suggests a figure that’s half of what you expected, do you subconsciously alter what you think is fair? In supplier negotiations, if a supplier tells you initially that they can deliver a product with a 60 day lead time and you negotiate to have it in 45 days, do you feel like you’ve done a good job?

For the record, the population of Myanmar, according to worldometers.com, is 54 million people.

Was your guess closer to the 17 million anchor I provided you at the start of this article or to the 54 million reality?





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  • CleanMark Labels

    This was a really great read! Love how you bring psychological principles into negotiation and procurement. The concept of anchoring is a good reminder that we should always be reflective and self-aware in key interactions.