The Anchoring Effect and Related Applications: Cognitive Inertia and Habitual Thinking

Research Article
Open access

The Anchoring Effect and Related Applications: Cognitive Inertia and Habitual Thinking

Junbo Huang 1*
  • 1 Western University    
  • *corresponding author 1104111219@qq.com
Published on 13 September 2023 | https://doi.org/10.54254/2754-1169/11/20230513
AEMPS Vol.11
ISSN (Print): 2754-1177
ISSN (Online): 2754-1169
ISBN (Print): 978-1-915371-49-2
ISBN (Online): 978-1-915371-50-8

Abstract

By analysis research on the anchoring effect of previous scholars, it was found that irrational judgments in financial markets due to the anchoring effect are significant with the influence of past information. By analyzing data from the equity and securities markets, we find that even professionals can make inaccurate judgments due to the anchoring effect. In addition, we found that the anchoring effect does not require a significant information factor to be implemented, as different experiments have shown that the subconscious mind can also influence people's decisions. However, it is interesting to note that the anchoring effect can also influence behavior in the opposite way, by limiting the sales of a product and thus increasing the sales of that product.

Keywords:

anchoring, cognitive inertia, habitual thinking, behavioral

Huang,J. (2023). The Anchoring Effect and Related Applications: Cognitive Inertia and Habitual Thinking. Advances in Economics, Management and Political Sciences,11,71-74.
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References

[1]. Birz, G., Dutta, S., & Yu, H. (2021). Economic forecasts, anchoring bias, and stock returns. Financial Management, 51(1), 169–191. https://doi.org/10.1111/fima.12355.

[2]. Campbell, S. D., & Sharpe, S. A. (2009). Anchoring bias in consensus forecasts and its effect on market prices. Journal of Financial and Quantitative Analysis, 44(2), 369–390. https://doi.org/10.1017/s0022109009090127.

[3]. Eysenck, H. J. (1966). Adaptation-level theory: An experimental and systematic approach to behavior. Behaviour Research and Therapy, 4(1-2), 69. https://doi.org/10.1016/0005-7967(66)90044-1.

[4]. Frykblom, P., & Shogren, J. F. (2000). An Experimental Testing of Anchoring Effects in Discrete Choice Questions. Environmental and Resource Economics, 16(3), 329–341. https://doi.org/10.1023/a:1008388421810.

[5]. Furnham, A., & Boo, H. C. (2011). A literature review of the anchoring effect. The Journal of Socio-Economics, 40(1), 35–42. https://doi.org/10.1016/j.socec.2010.10.008.

[6]. Maniadis, Z., Tufano, F., & List, J. A. (2014). One swallow doesn't make a summer: New evidence on anchoring effects. American Economic Review, 104(1), 277–290. https://doi.org/10.1257/aer.104.1.277.

[7]. Mussweiler, T., & Englich, B. (2005). Subliminal anchoring: Judgmental consequences and underlying mechanisms. Organizational Behavior and Human Decision Processes, 98(2), 133–143. https://doi.org/10.1016/j.obhdp.2004.12.002.

[8]. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124.

[9]. Tversky, A., & Kahneman, D. (1982). Judgment under uncertainty: Heuristics and Biases. Judgment under Uncertainty, 3–20. https://doi.org/10.1017/cbo9780511809477.002.

[10]. Wansink, B., Kent, R. J., & Hoch, S. J. (1998). An anchoring and adjustment model of purchase quantity decisions. Journal of Marketing Research, 35(1), 71. https://doi.org/10.2307/3151931.


Cite this article

Huang,J. (2023). The Anchoring Effect and Related Applications: Cognitive Inertia and Habitual Thinking. Advances in Economics, Management and Political Sciences,11,71-74.

Data availability

The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 2nd International Conference on Business and Policy Studies

ISBN:978-1-915371-49-2(Print) / 978-1-915371-50-8(Online)
Editor:Canh Thien Dang, Javier Cifuentes-Faura
Conference website: https://2023.confbps.org/
Conference date: 26 February 2023
Series: Advances in Economics, Management and Political Sciences
Volume number: Vol.11
ISSN:2754-1169(Print) / 2754-1177(Online)

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References

[1]. Birz, G., Dutta, S., & Yu, H. (2021). Economic forecasts, anchoring bias, and stock returns. Financial Management, 51(1), 169–191. https://doi.org/10.1111/fima.12355.

[2]. Campbell, S. D., & Sharpe, S. A. (2009). Anchoring bias in consensus forecasts and its effect on market prices. Journal of Financial and Quantitative Analysis, 44(2), 369–390. https://doi.org/10.1017/s0022109009090127.

[3]. Eysenck, H. J. (1966). Adaptation-level theory: An experimental and systematic approach to behavior. Behaviour Research and Therapy, 4(1-2), 69. https://doi.org/10.1016/0005-7967(66)90044-1.

[4]. Frykblom, P., & Shogren, J. F. (2000). An Experimental Testing of Anchoring Effects in Discrete Choice Questions. Environmental and Resource Economics, 16(3), 329–341. https://doi.org/10.1023/a:1008388421810.

[5]. Furnham, A., & Boo, H. C. (2011). A literature review of the anchoring effect. The Journal of Socio-Economics, 40(1), 35–42. https://doi.org/10.1016/j.socec.2010.10.008.

[6]. Maniadis, Z., Tufano, F., & List, J. A. (2014). One swallow doesn't make a summer: New evidence on anchoring effects. American Economic Review, 104(1), 277–290. https://doi.org/10.1257/aer.104.1.277.

[7]. Mussweiler, T., & Englich, B. (2005). Subliminal anchoring: Judgmental consequences and underlying mechanisms. Organizational Behavior and Human Decision Processes, 98(2), 133–143. https://doi.org/10.1016/j.obhdp.2004.12.002.

[8]. Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131. https://doi.org/10.1126/science.185.4157.1124.

[9]. Tversky, A., & Kahneman, D. (1982). Judgment under uncertainty: Heuristics and Biases. Judgment under Uncertainty, 3–20. https://doi.org/10.1017/cbo9780511809477.002.

[10]. Wansink, B., Kent, R. J., & Hoch, S. J. (1998). An anchoring and adjustment model of purchase quantity decisions. Journal of Marketing Research, 35(1), 71. https://doi.org/10.2307/3151931.