Anchoring

Today I bring you a public service announcement about your brain. I learned this while watching one of my favorite YouTube series about video gaming, Extra Credits, and it immediately struck me that this phenomenon applies directly to whisky and how my brain perceives the value of whisky. This article will be heavily plagiarized inspired by the above video, which puts it succinctly: “Our brains are more likely to think that a thing is good if we are told that it’s good beforehand.”

According to Wikipedia, anchoring is a cognitive bias that causes our brains to “depend too heavily on an initial piece of information offered (considered to be the ‘anchor’) to make subsequent judgments during decision making. Once the value of this anchor is set, all future negotiations, arguments, estimates, etc. are discussed in relation to the anchor.” In practical terms, this means if I tell you that the brand-new GlenBracken 15 is an excellent whisky and easily worth $80 a bottle, and assuming that you already have some positive perception of my ability to discern value in whisky, then those two pieces of information are the anchors that your brain uses to form a mental model of this new whisky. If you later see the same bottle on the shelf for $50, your brain will subconsciously do two things: 1) Remind you that you have a positive mental model of this bottle as being an “excellent whisky”, and 2) Inform you that this is WONDERFUL DEAL because it’s 37% off! Your anchors inform your decisions. If you saw that same bottle for $90, you would probably not get too excited. If you saw it for $120 you would be viscerally disgusted. All because my off-hand comment formed an anchor in your brain.

Even the lack of an anchor has a subconscious bias effect. If you have zero information about a bottle, or if your initial anchor was ambivalent or contradictory, you would probably pass the bottle by without even considering it. Your bias is that because you know nothing about a bottle (or because you have no net-positive or net-negative information), it can’t be worth your attention.

Advertisers and retailers know this very well. If you’ve ever seen an advertised sale or discount on a product that you’ve never heard of before, you were probably witnessing an attempt to capitalize on anchoring. The advertiser wants your initial mental model about the product to be “it’s supposed to cost $80” so that you’ll accept the one-time-only limited-time sale price of $50 as being a great deal. Even if the product is really intended to sell for $50 normally.

This works for more than just price. Imagine if I told you that a whisky you’ve never heard of, Hillbilly Holler Small Batch Bourbon, is excellent whiskey but that it’s highly allocated and only the luckiest of the lucky will ever be able to find a bottle for sale because it’s SO SUPER-DUPER RARE (and, again, assume that you’re somewhat inclined to believe stuff I say). Your brain will use this initial piece of data as its anchor to conceptualize this new whiskey as desirable because it’s rare. If you later see a bottle on the shelf – regardless of price – you will likely be drawn to it because of this bias.

Anchoring can also affect your assimilation of new information: If you already have an anchor, then you will judge all new information about the same topic in reference to your existing bias. You will easily accept information that agrees with it (say, another positive review) while subconsciously recoiling from and doubting information that refutes it. You’ll assume that a negative review must come from a bitter reviewer who has an axe to grind, rather than consider that your own bias might be wrong. Anchoring bias will even affect your own enjoyment of a product. You will, according to Extra Credits, be “a lot more likely to forgive its flaws and notice its positive aspects, which means you will be more likely to recommend it to other people.”

This is part of the reason that I actively avoid reading other reviews before typing up my own: I know that if I read good reviews they will inherently affect my own perception of a whisky. Bad reviews will do the same. Anchoring can cause a chain-on or Domino Effect: Early reviews will impact (positively or negatively) future reviewers, which will continually reinforce that anchor. Dissenting reviewers will be seen as outliers or as having agendas. Reviewers might even change their reviews so as not to be seen disagreeing with the majority or because their confidence in their own reviewing ability isn’t strong enough to contradict a majority, even if that majority is simply a result of early anchoring.

Anchoring effects our decisions in everything from online shopping to buying stocks to negotiating a car purchase, and it can be caused by reviews, videos, advertising, word-of-mouth, celebrity endorsements, and more. My goal in writing this is to help you identify this bias when making your own decisions, so you can partially mitigate its effects by recognizing where your perceptions are coming from and then doing further research with an open mind to confirm or negate your anchor before it leads you to make unwise purchases. That’s easier said than done, but at least now you know about it. Now excuse me, I have to go stand in an 8-hour line because Hillbilly Holler is releasing a limited edition bottling. It’s limited! It has to be good! Right?