Is Asking Your Boss For A $10 Billion Raise A Good Idea?

Question, Tired

Photo: Flickr/Bev Sykes

It might be.Anchoring is a fascinating cognitive bias where people “anchor” their thinking around facts or figures that may be completely irrelevant to subsequent decisions. For instance:

…an audience is first asked to write the last two digits of their social security number and consider whether they would pay this number of dollars for items whose value they did not know, such as wine, chocolate and computer equipment. They were then asked to bid for these items, with the result that the audience members with higher two-digit numbers would submit bids that were between 60 per cent and 120 per cent higher than those with the lower social security numbers, which had become their anchor.

So their social security numbers had nothing to do with the value of chocolate but nonetheless, it affected their bids. 

Anchoring is frequently mentioned in negotiation because we can exploit this effect by being the first to throw out a number.

Very often the other person is likely to anchor around that number and unconsciously be influenced by it.

But what if the number is absurdly high?

This study tested just that and the absurd number still produced a better result than the control condition:

Two studies were conducted to examine the effects of implausible anchors on initial salary offers. Participants provided a salary offer to a candidate after receiving a relevant anchor and an implausible anchor. The results of Study 1 indicated that a high implausible anchor influenced salary offers, even in the presence of the relevant anchor. Study 2 examined whether a more extreme implausible anchor would also affect salary offers. The results indicated that both the high anchor and the extremely high anchor led to higher salary offers than did the control condition.

Source: “Initiating Salary Discussions With an Extreme Request: Anchoring Effects on Initial Salary Offers” from Journal of Applied Social Psychology, Volume 41, Issue 7, pages 1774–1792, July 2011

So next time you negotiate, maybe it’s a good idea to err on the side of too extreme versus not extreme enough.

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