Noise Increases Anchoring Effects

Abstract

We introduce a theoretical framework distinguishing between anchoring effects, anchoring bias, and judgmental noise: Anchoring effects require anchoring bias, but noise modulates their size. We test it by manipulating stimulus magnitudes. As magnitudes increase, psychophysical noise due to scalar variability widens the perceived range of plausible values for the stimulus. This increased noise, in turn, increases the influence of anchoring bias on judgments. In eleven preregistered experiments (N = 3,552), anchoring effects increased with stimulus magnitude for point estimates of familiar and novel stimuli (e.g., reservation prices for hotels and donuts, counts in dot arrays). Comparisons between relevant and irrelevant anchors showed noise itself did not produce anchoring effects. Noise amplified anchoring bias. Our findings identify a stimulus feature predicting the size and replicability of anchoring effects––stimulus magnitude. More broadly, we show how to use psychophysical noise to test relationships between bias and noise in judgment under uncertainty.

Keywords: anchoring, anchoring effect, anchoring bias, noise, scalar variability, numerical cognition, judgment under uncertainty, judgment and decision making

JEL Classification: D03