Currently Rereading: Think Twice By Michael J. Mauboussin Part Three

I want to backtrack and share an example that the author uses in explaining the anchoring-and-adjustment heuristic. This is a tremendous illustration of how our mind works in these situations. mauboussin-bookshelf.jpg (553×369)

From page 17:

“Here’s an example of how this heuristic works, based on an exercise I did with my students at Columbia Business School. I gave them a form requesting two numbers. If you have never done this exercise, take a moment and jot down your responses.

(1) The last four digits of your phone number.

(2) An estimate of the number of doctors in New York City’s Manhattan borough:

The anchoring-and-adjustment heuristic has a bias, which predicts that the phone number will influence the doctor estimates. In my class, the students with phone numbers ending in 0000-2999 guessed an average of 16,531, while those with 7000-9999 reckoned 29,143, higher by 75 percent. (As best as I can tell, there are approximately 20,000 doctors in Manhattan.)

Of course, individuals know that the last four digits of their phone number have nothing to do with the population of doctors in Manhattan, but the act of thinking about an arbitrary sum prior to making an estimate unleashes the powerful bias. What’s also obvious is that the students would have most assuredly give a different estimate if I had reversed the order of the questions.”

I found this illustration most intriguing and I would like our readers to comment and share some similar illustrations.

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