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

44 Pages Posted: 26 Nov 2014 Last revised: 2 Jan 2015

Yan Zhang

University of Chicago - Booth School of Business

Ye Li

University of California, Riverside (UCR) - Department of Management and Marketing; Center for Decision Sciences, Columbia University

Ting Zhu

University of Chicago

Date Written: November 25, 2014

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

Suggested Citation

Zhang, Yan and Li, Ye and Zhu, Ting, How Multiple Anchors Affect Judgment: Evidence from the Lab and eBay (November 25, 2014). Columbia Business School Research Paper No. 14-62. Available at SSRN: https://ssrn.com/abstract=2530690 or http://dx.doi.org/10.2139/ssrn.2530690

Yan Zhang

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Ye Li (Contact Author)

University of California, Riverside (UCR) - Department of Management and Marketing ( email )

United States

Center for Decision Sciences, Columbia University

New York, NY
United States

Ting Zhu

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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