Understand Anchored Thinking to make smarter choices

When I  began  my career as a corporate trainer I conducted  workshops on public speaking for which  I was paid a modest  remuneration.  Subsequently I offered workshops on a high value  added subject of Lateral Thinking. I found myself running into  high resistance in respect of my fees which were   much higher than what I sought  for  my public speaking workshops but  to my mind were in keeping with the much higher  value addition that I provided.

‘You   charge a fraction of this amount for your public  speaking courses.  Why are you charging so much for your lateral thinking workshop?” was  the common  refrain. I realized that a certain psychological phenomenon was  at work. I reacted creatively.  I lowered my fees for my public speaking  workshops and even accepted a small honorarium and sometimes did  it free. I then raised my fees for my lateral thinking  working again in keeping  with my expertise  in that subject and its possible beneficial impact on my trainees.

It worked.

What was happening here ? Here I was,  lowering my fees in one workshop and starting  to get  higher fees for my other  offering! 

Our mind is susceptible to anchoring .The initial impression or opinion or experience influences  later developments even  though  the latter  may  be  unconnected with what happened in the past. 

Let me give you another example. In a class on lateral thinking I asked my trainees to write down on paper the first 3 digits   of their mobile phone number.  Then I placed before them a bottle of perfume and asked them what according to them was the price of the bottle. I found that all of them had suggested a price that was not very different from the  3 digit  numbers they  had jotted down . The actual price was in fact in double digits !  The telephone numbers had obviously no  relationship to the perfume bottle price .

The minds of my trainees were  anchored by the 3 digits. 

To add to the fun when I showed them other perfume bottles  and found that   they were willing to pay prices not very different from their offer for the first bottle irrespective of the actual price of the product. The later bottles were of much better quality and much  higher prices. This reminded me of my predicament when I quoted much higher fees for my lateral thinking workshops.  

You may have noticed in negotiations with  unions –or even your domestic help—that they start with what you may feel is an absurd amount .The latter also  knows that the demand is very high.  Their  intention is to anchor your mind to the figure quoted . Your tendency is to negotiate a figure in relation to that figure on a plus minus basis usually the latter!

When a creative enterpreneur decided to start a chain of coffee shops in Chennai that would sell coffee at more than  double the price at the adjacent Udipi hotel he was considered stupid. After all , the reasoning went , the Udipi price   would serve as an anchor and who in that conservative cost conscious city would pay twice that amount for a cup of coffee. But the entrepreneur  had other ideas. He created a teenage friendly ambience ,with rock music , exotic coffee flavours, unmatched by Udipi hotels. What he  did was   to ‘shift’ the anchor. He succeeded [KWIKY’S] . Thereafter  his  prices became an anchor for other chains.

Have you considered that the first job you accepted influenced your entire career thereafter ? If you took up your first job  without much thinking –say you got carried away by the salary  –you may have found that you were stuck with a boring demotivating situation . You are now at your wit’s end . I had that experience.You find it almost  impossible to change careers and had to suffer in silence for the rest of your active life– bored and fed up.

How can one  avoid  anchored thinking?

Before you buy anything  expensive ask yourself if you have been anchored by anyone or by any advertisement.

Even  a  little thinking on this score will alert you and save you a loss. Examine all your  past decisions for their  long term effect . Resist the temptation to grab the first  thing that comes along. Wait and ponder.

Contemplate the anchors in your life.  Re- examine them and ask if they are relevant today and in the future .

This will open your mind to new avenues.  Many years ago I went to a cinema hall in Mumbai determined to see the film Poonam Ki Raat  a  1960’s  suspense thriller . My thoughts on what price to pay to the blackmarketer—I was aware that the tickets were being sold in black—were anchored by  my  allowance which I knew  was a fraction of the going rate at the blackmarket . I bargained smartly and got the ticket at my anchor rate. I was about to congratulate myself when the ticket seller played spoilsport.

‘Saab Kishore Sahu murderer  hai’ he said .It was like your car tyres had been intentionally deflated .