One day, long after my wife and I had lost a bid on a house, we got a call from our realtor asking us if we were still interested in the house.\u00a0 We were.\u00a0 Since the owner had come back to us to ask us for a new offer, I bid $4,000 less than the asking price. It was less than we had bid the first time. The owner responded vaguely, saying, \u201cI\u2019m going to need more money than that.\u201d\u00a0 Perhaps, dear reader, you\u2019re a better person than I because my immediate reaction was the desire to add a single dollar to my previous offer.\u00a0 In light of a number of considerations, my offer was quite fair.\u00a0 In our previous interactions with the seller a month or so before, he had agreed to a sale to us for less than his asking price, he then delayed in signing the contract, and then surprised us by signing another contract despite our verbal agreement.\u00a0 In the end, we increased our offer by $1000\u2014instead of just $1\u2014and he accepted.\u00a0 We spent many happy years raising our daughter in that house before we moved again.<\/p>\n
Lawyers and lay-persons alike go through many such interactions.\u00a0 We have our price, our number, our value, and the other party to the negotiation has theirs.\u00a0 We become rather attached to our numbers.\u00a0 They become the base to which we cling.\u00a0 It is like this for all kinds of things even apart from numbers.\u00a0 If my wife says, \u201cLet\u2019s have a beach vacation!\u201d my first response will likely be to think of places on the Florida coast as opposed to the small, sandy fringes of Redfish Lake in Idaho\u2019s Sawtooth Mountains.\u00a0 \u201cBeach\u201d anchors me to ideas of long stretches of warm sand on vast shorelines.\u00a0 If some insurance adjuster called me to offer $50,000 on a case we were negotiating, my counteroffer would usually be somewhere near that number instead of being closer to $50 million.\u00a0 This tendency to stick close to information we\u2019ve already been given is called an \u201canchoring bias\u201d or \u201canchoring effect.\u201d\u00a0 A helpful definition of anchoring is as follows: \u201c[it] occurs when an individual depends too much on an initial piece of information (the \u201canchor\u201d) to make subsequent judgments.\u201d[1]<\/a><\/p>\n An anchor can be relevant\u2014like the word \u201cbeach\u201d bringing to mind the sands of Florida versus the sands of a mountain lake.\u00a0 An anchor can be irrelevant as well.\u00a0 In fact, I use the mystical force of the irrelevant anchor to reveal to my students the power of anchoring.\u00a0 So, this month, I wish to share with you an exercise I use to illustrate how anchoring works.\u00a0 At the end, I have provided the \u201cforms\u201d you\u2019ll need to perform the exercise with your students.\u00a0 First, I\u2019ll provide a description of the set up.<\/p>\n I will come into the large group with two separate forms that I\u2019ll distribute among the group.\u00a0 The forms say two different things, but that isn\u2019t known to the group until the exercise is over.\u00a0 One form, as you\u2019ll see, reads as follows: \u201cThe current population of Topeka, Kansas is 112,000.[2]<\/a>\u00a0 Please write below your guess for the current population of Des Moines, Iowa?\u201d\u00a0 The second form asks the same question but provides a much larger anchor.\u00a0 \u201cThe current population of Oklahoma City, Oklahoma is 1,515,000.\u00a0 Please write below your guess for the current population of Des Moines, Iowa?\u201d\u00a0 I make enough photocopies for each student to receive just one form, but half of the copies will contain the smaller Topeka number and half will contain the larger Oklahoma City number.<\/p>\n Once I am in the classroom, I start off by telling my students that I\u2019m going to give them a short quiz on U.S. capitals.\u00a0 I then hand out the forms to the class.\u00a0 Here, however, I take great care in distributing the first form to the students sitting on one half of the class and great care in getting the second form to the students sitting in the other half of the classroom.\u00a0 This is best done in rooms that have a center aisle, but I\u2019ve pulled it off in rooms without a center aisle by looking for larger-sized gaps between the halves.\u00a0 Once the forms are distributed, I tell the students to write their answer on their forms.\u00a0 Finally, I ask students for their answers, alternating from the two sides of the room.\u00a0 As I write down their answers, I am careful to separate the answers coming from the two halves of the class.\u00a0 For instance, I\u2019ll write down numbers from the small-anchor side of the class on one side of a white board and the numbers from the large-anchor side of the class on the other side of the board.\u00a0 I write down about 5 to 7 answers from each half.\u00a0 You\u2019ll notice a lovely disparity developing!\u00a0 Low numbers will come from the Topeka group.\u00a0 Higher numbers will come from the Oklahoma City group.<\/p>\n Once I have the obvious disparity on the board, I like to chide the two halves of the group on how their numbers ended up so different even though they\u2019re all classmates answering the same question.\u00a0 It\u2019s then that I ask one student on one side to read their form and then I ask a student from the other half to read their form\u2014thus revealing the trick.\u00a0 This becomes the perfect spot to discuss anchoring, comparing the answers on the board with the anchors on the forms.\u00a0 It\u2019s worth pointing out to them the irrelevancy of the anchors they were given.\u00a0 The population of one state capital provides next to no useful information in determining the population of another state\u2019s capital. \u00a0It\u2019s perhaps only slightly more relevant than providing the students with, say, the population of Luxembourg.\u00a0 If trying to guess a 2024 population number for Des Moines, a far more relevant anchor would be telling the students that the population of Des Moines was 720,000 in 2022.<\/p>\n It’s a fun little lesson that is memorable enough to prompt students to carefully weigh the weight of the anchors they will select for their later negotiations or proposals.\u00a0 I hope you find this exercise to be of some use, though I suspect that if you actually live in Des Moines, you might to have to change a few things to make this exercise useful again.\u00a0 After all, the knowledge of the actual population of Des Moines is its own weighty anchor.<\/p>\n <\/p>\n <\/p>\n