Cognitive Bias

Question 1

What is one cognitive bias and what is it? What is Heuristics?

Answer 1

• Anchoring bias is a cognitive bias that causes us to rely too heavily on the first piece of information we are given
• When making estimates or interpreting newer information, we reference our anchor, instead of seeing it objectively.

Heuristics are less time consuming methods of making decisions. In a way, heuristics are mental shortcuts. There is no guarantee of success, but this approach is more practical in terms of time and effort required.

heuristics may incorrectly apply familiar schemas to situations that do not match.

Question 2

Aim of Tversky and Kahneman

Answer 2

to test the influence of the anchoring bias on decision-making

Question 3

Method of Tversky and Kahneman

Answer 3

High school students were used as participants.
Participants in the “ascending condition” were asked to quickly estimate the value of 1 X 2 X 3 X 4 X 5 X 6 X 7 X 8 in five seconds.

Those in the “descending condition” were asked to quickly estimate the value of 8 X 7 X 6 X 5 X 4 X 3 X 2 X 1.

Since we read from left to right, the researchers assumed that group 1 would use “1” as an anchor and predict a lower value that the group that started with “8” as the anchor.

The expectation was that the first number seen would bias the estimate of the value by the participant.

Question 4

Findings of Tversky and Kahneman

Answer 4

Median estimate is lower for ascending conditions and higher for descending group. However, both esitestimates are under the actual value.

Question 5

Conclusion of Tversky and Kahneman

Answer 5

The first number seen by the participants seems to have biased the final estimate.
Since they had no time to calculate in 5 seconds, they had to make an estimation based on the first few multiplications and use cognitive heuristics that are influenced by the anchoring bias. When those numbers where smaller, the estimate was smaller.