Suppose Ryan and Rita were randomly shown the numbers 25 and 67, respectively, and then asked to estimate the price of an item about which they have relatively limited knowledge. According to findings from behavioral economics, we would expect

A) Ryan to estimate a price higher than what Rita would estimate.
B) Ryan to estimate a price lower than what Rita would estimate.
C) Ryan to estimate a price about the same as what Rita would estimate.
D) the randomly shown numbers to have no influence on their estimates.

Question

Thrishala Weerawardana · Accepted Answer

Final Answer : B, Explanation :  This phenomenon is known as anchoring, where individuals rely too heavily on the first piece of information (the anchor) when making decisions. Since Rita was shown a higher number (67) compared to Ryan (25), she is likely to estimate a higher price due to the anchoring effect.

Definitions

Learning Objectives

Learning Objectives

Related questions