Editing Anchoring effect (section)

==Experimental findings==
[[File:Daniel Kahneman (3283955327) (cropped).jpg|thumb|180px|[[Daniel Kahneman]], one of the first researchers to study anchoring]]
The anchoring and adjustment heuristic was first theorized by [[Amos Tversky]] and [[Daniel Kahneman]].<ref name="TverskyKahneman1974" /> In one of their first studies, participants were separated into one of two conditions, and either asked to compute, within 5 seconds, the product of the numbers one through to eight, either as {{math|1 × 2 × 3 × 4 × 5 × 6 × 7 × 8}} or reversed as {{math|8 × 7 × 6 × 5 × 4 × 3 × 2 × 1}}. Because participants did not have enough time to calculate the full answer, they had to make an estimate after their first few multiplications. When these first multiplications gave a small answer – because the sequence started with small numbers – the median estimate was 512; when the sequence started with the larger numbers, the median estimate was 2,250. (The correct answer is 40,320.) In another study by Tversky and Kahneman, participants were asked to estimate the percentage of African countries in the United Nations. Before estimating, the participants first observed a roulette wheel that was predetermined to stop on either 10 or 65. Participants whose wheel stopped on 10 guessed lower values (25% on average) than participants whose wheel stopped at 65 (45% on average).<ref name="TverskyKahneman1974">{{cite journal|last1=Tversky|first1=A.|last2=Kahneman|first2=D.|title=Judgment under Uncertainty: Heuristics and Biases|journal=Science|volume=185|issue=4157|year=1974|pages=1124–1131|doi=10.1126/science.185.4157.1124|url=https://www2.psych.ubc.ca/~schaller/Psyc590Readings/TverskyKahneman1974.pdf|pmid=17835457|bibcode=1974Sci...185.1124T|s2cid=143452957}}</ref> The pattern has held in other experiments for a wide variety of different subjects of estimation.

As a second example, in a study by [[Dan Ariely]], an audience is first asked to write the last two digits of their social security number and consider whether they would pay this number of dollars for items whose value they did not know, such as wine, chocolate and computer equipment. They were then asked to bid for these items, with the result that the audience members with higher two-digit numbers would submit bids that were between 60 percent and 120 percent higher than those with the lower social security numbers, which had become their anchor.<ref>Edward Teach, "[http://www.cfo.com/article.cfm/3014027 Avoiding Decision Traps] {{Webarchive|url=https://web.archive.org/web/20130614061542/http://www.cfo.com/article.cfm/3014027 |date=2013-06-14 }}", [[CFO (magazine)|''CFO'']] (1 June 2004). Retrieved 29 May 2007.</ref> When asked if they believed the number was informative of the value of the item, quite a few said yes.<ref name="ChapmanJohnson1999">{{cite journal |last1=Chapman |first1=Gretchen B. |last2=Johnson |first2=Eric J. |year=1999 |title=Anchoring, Activation, and the Construction of Values |journal=Organizational Behavior and Human Decision Processes |volume=79 |issue=2 |pages=115–153 |doi=10.1006/obhd.1999.2841 |pmid=10433900}}</ref> Trying to avoid this confusion, a small number of studies used procedures that were clearly random, such as Excel random generator button<ref name="fudenberg2012">{{cite journal|last1=Fudenberg|first1=Drew|last2=Levine|first2=David K|last3=Maniadis|first3=Zacharias|title=On the Robustness of Anchoring Effects in WTP and WTA Experiments|journal=American Economic Journal: Microeconomics|volume=4|issue=2|year=2012|pages=131–145|doi=10.1257/mic.4.2.131|s2cid=18602138 |url=https://eprints.soton.ac.uk/341895/1/AEJMicro_Paper.pdf}}</ref> and die roll,<ref name="ioannidis2020">{{cite journal|last1=Ioannidis|first1=Konstantinos|last2=Offerman|first2=Theo|last3=Sloof|first3=Randolph|title= On the effect of anchoring on valuations when the anchor is transparently uninformative|journal=Journal of Economic Science Association|volume=6|issue=1|year=2020|pages=77–94|doi=10.1007/s40881-020-00094-1|doi-access=free}}</ref> and failed to replicate anchoring effects.

The anchoring effect was also found to be present in a study<ref>{{Cite journal|last=Shuen Shie|first=Fu|date=2019|title=The Anchoring Effect of Historical Peak to House Price|journal=The Journal of Real Estate Research|volume=41|issue=3|pages=443–472|doi=10.22300/0896-5803.41.3.443|s2cid=211337975 }}</ref> in the ''Journal of Real Estate Research'' in relation to house prices. In this investigation, it was established that the 2-year and 9-year highs on the [[Case–Shiller index|Case-Shiller House Price Index]] could be used as anchors in predicting current house prices. The findings were used to indicate that, in forecasting house prices, these 2-year and 9-years highs might be relevant.

The anchoring effect was also found to be present in a study in the ''Journal of Behavioral Finance'' in relation to stock purchase behavior.<ref>{{Cite journal|last1=Itzkowitz|first1=Jennifer|last2=Itzkowitz|first2=Jesse |last3=Schwartz|first3=Andrew|date=2023|title= Start Small and Stay Small: Anchoring in App-Based Investing|journal=The Journal of Behavioral Finance|volume=25 |issue=4 |pages=464–480 |doi=10.1080/15427560.2023.2209233 }}</ref> The study found that when using an app-based stock brokerage, an investor’s first stock purchase price serves as an anchor for future stock purchases. The findings indicate that when investors start by making only a small stock purchase, they end up with less accumulated investments in the long run.