Anchoring

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Anchoring

The act of basing an investment decision on irrelevant information. For example, if one bases the value of a stock on its price a year ago, one is practicing anchoring. This can be a dangerous practice, but it is also easy to do. Anchoring is a concept in behavioral economics, which states that people often make decisions based on their perceptions and feelings in addition to (and sometimes instead of) facts.
References in periodicals archive ?
There are two cognitive mechanisms for optimism bias: egocentrism and focalism (Chambers, Windschitl, & Suls, 2003).
Justin Kruger & Jeremy Burrus, Egocentrism and Focalism in Unrealistic Optimism (and Pessimism), 40 J.
The influence of egocentrism and focalism on people's optimism in competitions: When what affects us equally affects me more.
Thus, low-materialists might be particularly sensitive to the focalism reduction task while high-materialists might be more rigid and unable to adjust their affective forecast when given a more accurate picture of the future.
The focalism explanation for affective forecasting (Wilson et al.
05, but this was subsumed by an interaction between focalism condition and materialism level, F (1, 388) = 6.
However, the Focalism Condition x Materialism interaction that appeared in the affective forecasts failed to emerge, F (1, 388) = 0.
However, the focalism main effect did not emerge in the affective forecasts, so mediational tests were not conducted.
Similarly, a Focalism Condition x Materialism interaction did emerge in the affective forecasts.
non-materialists) and focalism condition (control vs.
However, a significant Focalism Manipulation x Imagined Lag interaction (F (2, 172) = 25.
Anchoring or focalism, a form of cognitive bias describes the common human tendency to rely too heavily, or "anchor," on one trait or piece of information when making decisions (Tversky & Kahneman, 1974).