The Power of Anchoring

We decided to explore the effects of anchoring – relying too heavily on the first piece of information we see when making a decision.

  

The experiment

Everyone reading this will have had the same email. It’s a staple of office life.

“I’m taking part in a charity run, will you sponsor me?”

If I asked you what would influence your donation amount, you’d probably ask, “Who’s asking for sponsorship?”, “What’s the charity?” or even “How skint am I this month?”

But what about the amounts other people had sponsored? Would seeing that others donated large amounts on an online giving portal nudge you into giving more?

We created a behavioural experiment with matched nationally representative samples of 1,000 UK adults to explore this.

 

We mocked up two charitable giving pages and asked people seeing them how much they would donate towards their friend’s charity run. Like in real life, these had names, pictures, good luck messages and donation amounts.

The only difference between the control and the test versions was that test version used higher average donations (£20, £50, £100) than the control (£5, £10).

We used a monadic survey design to isolate the influence of the anchors; matched nationally representative samples of 1,000 UK adults saw either the test or control version.

 

 

What we found

You can get people to double their donation merely by showing them other people donate more. Mean donations were £8.81 when people were anchored low (£5, £10) but £18.17 when they were anchored high. This was a 106% uplift. 

 

  

Knowledge = immunity?

As this was part of a larger behavioural experiment examining the effectiveness of a range of different behavioural interventions, we also had the opportunity for some mischievous subgroup analysis. Later in the survey we asked participants a range of profiling questions. You might be surprised to learn that almost half of the UK population agreed that “I am more intelligent than the average person” (49%) and around 1 in 8 “have heard of behavioural economics” (13%). 

Neither inoculate you against anchoring, as it operates unconsciously.   

 

 

Giving is inherently social

Thinking more broadly about charitable giving, social pressure plays an important role.

Sponsoring someone bonds us closer to them. It’s a tangible signal that you care about them and their cause. When you listen to people talk about sponsorship, many admit to feeling a subtle pressure: for example “will the person asking be offended if I say no?” There’s also pressure not to step out of line with our peers: “what if everyone else gives and I don’t?” 

My interpretation? In our experiment anchoring is exacerbated by social pressure: an interaction effect applies. 

 

Isolating anchoring from social pressure – experiment 2

We asked a simple question: “You want to make a one-off donation to a cancer charity. You go to their website and find the donation screen below. How much would you donate?”

We mocked up a donation web page, again with two versions. In each you could select from three suggested donation amounts, or enter a sum of your own choosing. The test version prompted people to donate larger amounts (£20, £80, £150) than the control (£10, £50, £100). This was the only difference.

  

What we found

Anchoring also increased charitable donations in this experiment, but the      experimental effect was not as large (a 45% uplift).

As before, a higher anchor not only meant larger donations, but more people donating and greater variance in giving (choosing to donate a bespoke amount rather than picking from the amounts suggested).

 

 So what have we learnt?

  

Anchoring is powerful

Anchoring is a subtle signal that drives our choices. Context is the driving factor here, not the individual. If you control the context, you control the choice.

 

Anchoring affects all of us 

As our cheeky subgroup analyses indicate, knowledge of behavioural economics does not inoculate you from cognitive biases. Think hard on this the next time an estate agent or car salesperson takes you through a few options in an order of their choosing.

The effects of anchoring are unconscious.

Anchoring works unconsciously. Applying it ethically should be our first concern.