Graeme Newell's video: What is the Anchoring Effect

What is the anchoring effect? It is a cognitive bias and behavioral finance concept that tricks us into paying more. Why? Because we compare the price of things to other things around it. Anchoring bias is one of the behavioral biases in finance that has us overpaying for things because marketers can manipulate our perception of value. When retailers want us to believe that an item is a great value, there are two ways they can do it. They can go the EXPENSIVE way and work hard to improve quality and price, or they can go the EASY way, and simply surround their item with poor quality, more expensive comparisons. Brain science tells us that we assess the value of an item not by looking at the amount of pleasure that item provides, but by comparing that item to similar items around it. Understanding the anchoring effect and other cognitive bias in decision-making is one of the most powerful ways to make smarter investing decisions and more astute day-to-day money choices. Finance psychology expert Graeme Newell explains how our very flawed human brain tends to slip up when we make big finance and life decisions. Most of our decision-making is done in our subconscious brain. When we make a choice, what happens is that our subconscious brain feels something and then our conscious brain affirms what we already believe. Overcoming cognitive bias in decision-making is not hard. It’s simply a matter of learning to recognize the signs that a cognitive bias might be likely, then stopping the pattern. Behavior biases in finance show up all the time. Behavioral science shows us the way forward and gives us smart tactics for making optimal decisions. The key is to learn tactics from finance psychology and behavioral finance concepts that we can put into action throughout the course of our day. Graeme Newell is a researcher in behavioral investing, behavioral economics, and finance psychology. He is a professional economics speaker, a personal finance speaker, and an expert in behavioral investing. In this video, you’ll learn all about how cognitive bias can trick us into making foolish choices. You’ll learn specific ways to recognize the signs that a bad decision is likely, then how to quickly get back on track. Watch this video to learn about the new research that’s revealing the best strategy for making smarter decisions. 🔴 Subscribe for more videos just like this: https://bit.ly/3atitPl About Graeme’s Channel: I’m a researcher, speaker, and author who specializes in behavioral finance. I take perverse pleasure in putting people inside of brain scanners, then asking them to make important money decisions. My videos reveal the vulnerable situations when business leaders and everyday people are most likely to make crazy-bad, impulsive money decisions. I teach how to use brain science insights to make smarter decisions that grow businesses and increase wealth. Learn more about how brain science insights can help you make smarter decisions: https://graemenewell.com/