The anchoring bias is a cognitive bias that occurs when people rely too heavily on the first piece of information they receive (the "anchor") when making decisions. This can lead people to make judgments that are not logically sound because they are overly influenced by the initial anchor.

For example, consider a scenario in which a person is trying to decide how much to bid on a car at an auction. If the first bid placed on the car is $500, the person may anchor on this initial bid and base their subsequent bids around it, even if the true value of the car is much higher or lower. This can lead the person to overpay or underpay for the car because they are not considering all of the relevant information in a logical and unbiased way.

The anchoring bias is a common problem in negotiation situations, where one party may present an initial offer that serves as an anchor for subsequent discussions. It can also play a role in decision-making situations where people are trying to estimate probabilities or quantities, such as in the field of finance.

The concept of the anchoring bias was first introduced by psychologists Amos Tversky and Daniel Kahneman in the 1970s. They conducted a series of experiments that demonstrated how people's judgments and decisions are often influenced by arbitrary or irrelevant information, even when that information is not directly related to the problem at hand.

Their work on the anchoring bias helped to establish the field of behavioral economics, which studies the psychological and cognitive factors that can influence economic decision-making. The anchoring bias has since been widely studied and has been found to play a role in a variety of decision-making contexts, including negotiations, valuation, and risk assessment.

The anchoring bias is now widely recognized as a fundamental aspect of human cognition, and it has been the subject of numerous academic papers and books. The concept has also gained significant attention outside of academia, with the work of Tversky and Kahneman and other researchers in the field influencing the way that businesses, governments, and individuals approach decision-making.

If you want to have fun with this one experiment, I did with developers when estimating a new project. We would usually be on a call and talk through what they think it would take to get something done. I changed that, and instead of waiting for us all to be together, I emailed the three developers separately and asked for their estimates in isolation. What was very interesting (for me) was the range of the three. The low-end number was very close to what had been used in previous estimates, but the average was higher and aligned with previous project closeouts for similar work.

It is vital to receive information from numerous sources, comprehend the context of the data, and involve multiple stakeholders in the decision-making process to eliminate this bias. Because of the possibility of anchoring bias, OCM practitioners and technical project managers may find themselves in a position where they need to analyze all of the available options and make judgments based on limited information.