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  • Decisionmaking Bias

    Posted by Jonathan on January 17th, 2003 (All posts by )

    Megan McArdle blogged:

    I’m hearing a fair number of comments along the lines of “Wow! She’s not jaw-droppingly hideous the way she said she was!” I don’t recall ever really mentioning my appearance. . . how did I convey the impression that I was 300 pounds and covered with warts? Of course, I suppose it’s better to set up low expectations than to disappoint.
    This is a good illustration of a common decisionmaking bias that behavioral economists call anchoring. In this case, McArdle’s occasional self-deprecating wisecracks were the only information about her appearance that many readers had, and skewed their expectations in the direction of “low.” Some of those readers were therefore surprised to learn that she is actually quite attractive.

    Other examples of anchoring abound. In my own experience, traffic became systematically faster on a stretch of local expressway when a “Minimum Speed 40” sign was removed. When I met women through personal ads, I found that any explicit mention in my advertisement of a personal characteristic that I considered negative, and wanted to avoid in prospective mates, was likely to generate at least one response from somebody who considered it positive. (For example, “dislikes Clinton” might have a brought a reply from a two-time Clinton voter.) The existence of anchoring bias implies, among other things, that it’s wise in negotiations to mention desirable, even exaggerated, outcomes and avoid mentioning undesirable ones (make low initial bids and high initial offers); that you should avoid joking about death or lawsuits with the doctor who is treating you in an emergency room; and that platitudes about accentuating the positive and minimizing the negative may have an empirical basis.