Jonah Lehrer, Anchoring Bias, & The BP Oil Spill

Original source: SimoleonSense.com .

Introduction (via Jonah Lehrer @ Science Blogs)

In the last few months, the globalized world has endured two very different crises. First, there was the ash cloud over Europe, which paralyzed air travel for millions of passengers. Then, there is the leaking oil well in the Gulf of Mexico, which continues to spew somewhere between 5000 and 60,000 barrels of crude into the ocean every day.

While these disasters have nothing in common, our response has been plagued by the same fundamental problem. In both instances, officials settled on an early version of events – the ash cloud posed a severe danger to plane engines, and the oil well wasn’t a very bad leak – and then failed to update that version in light of new evidence. As a result, valuable time was squandered.

This is a form of anchoring, a mental bias first outlined (of course) by Kahneman and Tversky. One of my favorite demonstrations of anchoring was done by a group of MIT economists led by Dan Ariely, as they conducted an auction with their business graduate students. (The study was later repeated with executives at the MIT Executive Education Program with similar results.) The items for sale included everything from a fancy bottle of French wine to a cordless keyboard to a box of chocolate truffles. The auction, however, came with a twist: Before the students could bid, they were asked to write down the last two digits of their social security number. Then, they were supposed to say whether or not they would be willing to pay that numerical amount for each of the products. For instance, if the last two digits of their social security number were 55, then they’d have to decide whether or not the bottle of wine or the cordless keyboard were worth $55. Finally, the students were instructed to write down the maximum amount they were willing to pay for the various items.

Click Here To Read: Jonah Lehrer, Anchoring Bias, & The BP Oil Spill