Anchors as references in which our mind can get stuck.What is mental anchoring?
Stubbornness, myopia or stuck in the past?
Mental
anchoring is what happens when a narrow ancient reference stays
firmly stuck within the mind (as if some neurons keep being wired together)
It affects how we perceive, think, recall, analyze and
make decisions.
This reductive mental process, also called focalism, can take place:
Mental
anchoring is what happens when a narrow ancient reference stays
firmly stuck within the mind (as if some neurons keep being wired together)
It affects how we perceive, think, recall, analyze and
make decisions. This reductive mental process, also called focalism, can take place:
-
On the basis of
previous references such as:
-
Strongly ingrained past situations, events,
-
data, numbers, values
-
Number anchoring is a phenomenon in itself.
For example, if a number, even highly exaggerated, fanciful or irrelevant
with the topic is stated just before an analysis, negotiation, valuation,
investment, spending, it unconscious influences strongly the reasoning.
See also below the role or an ancient price reference; often the initial
buying price on economic / financial estimates and decisions.
For example, if a number, even highly exaggerated, fanciful or irrelevant
with the topic is stated just before an analysis, negotiation, valuation,
investment, spending, it unconscious influences strongly the reasoning.
See also below the role or an ancient price reference; often the initial
buying price on economic / financial estimates and decisions.
- Also past impressions, ideas, paradigms, explanations,
- Even some sentiments felt at that time.
- While
ignoring other aspects of the situation,
either neglecting either new events or skipping a deeper analysis of
the available information) that make the
situation differ from the past
(or from the way we evaluated it in
the past).
What are the causes?
Anchored eyes, anchored brain, anchored heart or anchored feet ?
The causes of this narrow mental attitude might be either:
The causes of this narrow mental attitude might be either:
- Cognitive
(focusing on a previous reasoning, a first perception,
a simplistic initial analysis)
a simplistic initial analysis)
- Or emotional
(remembering some pleasant or painful situation).
A subjective anchoring on past references, even sometimes on first impressions,
without taking into account current realities and trying to anticipate
future evolutions, is a rather frequent type of behavioral biases.
It can be categorized more precisely as an oversimplified heuristic, and even,
when it persists for a long time, an
automaticity.Consequences on behaviors
Mental anchoring tends to bring stubborn behaviors
and is the father and mother of:
and is the father and mother of:
- "Cognitive dissonance"
- The "status quo bias"
(behavior mental conservatism, resistance to change,
or just slow / frozen mind / behavior (
underreaction).
or just slow / frozen mind / behavior (
underreaction).=> The anchoring bias, when it persists (because the mental adjustment to the actual
situation is delayed or never takes place), tends to lead to underperforming or
even disastrous decisions and behaviors.
An example in 
economics and finance
In economics and finance, the "prospect theory" gives the example of the
"loss aversion".
In a version of this specific form of anchoring, the investor mind often stay focused /
stuck on a past
price reference.
It can be :
He / she does not accept to sell an asset he / she owns as long as its current price
is under that reference price, even if its future price prospect have been dwindling.
=> Therefore he/she takes the risk of losing more money by keeping an asset that
did not deliver its promises.
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"loss aversion".
In a version of this specific form of anchoring, the investor mind often stay focused /
stuck on a past
price reference.
It can be :* his/her buying price (this is the most usual price anchor),
* or sometimes a round price,
* or a past peak price,
* or some rigid / stubborn selling objective price decided in the past...
* or sometimes a round price,
* or a past peak price,
* or some rigid / stubborn selling objective price decided in the past...
He / she does not accept to sell an asset he / she owns as long as its current price
is under that reference price, even if its future price prospect have been dwindling.
=> Therefore he/she takes the risk of losing more money by keeping an asset that
did not deliver its promises.
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