How Multiple Anchors Affect Judgment: Evidence from the Lab and eBay

Abstract

The vast majority of anchoring research has found that judgments assimilate toward single anchors, but no papers have directly compared the impact of one anchor with that of multiple anchors. We hypothesized that the presence of additional anchors can reverse the usual anchoring effect. When one anchor is paired with a second, moderate anchor, people rely more on the additional anchor when the original anchor is extreme than when it is moderate. Extreme original anchors therefore generate less extreme estimates than moderate original anchors do in the two-anchor case — a reversed anchoring effect. Three controlled experiments verified that although estimates assimilated to single anchors, the reverse occurred when people were simultaneously given a second anchor: extremely low (high) anchors generated higher (lower) estimates than moderately low (high) anchors. A natural experiment using eBay auctions in the U.S. and China provided corroborating evidence. This research has implications for pricing strategies when there is more than one price cue available.

Keywords: anchoring; multiple anchors; anchor plausibility; product valuation; pricing; eBay; buy-it-now

JEL Classification: D12, C91, D80