The Legal Analyst: A Toolkit for Thinking about the Law

By Ward Farnsworth | Go to book overview

25 Anchoring

People prefer not to make judgments from scratch; they find it more comfortable to take some point of reference—a suggestion about the answer from elsewhere—and then adjust it until it sounds right. This isn’t so much a deliberate strategy as a psychological temptation, and it is hard to overcome. The practical result is that an initial suggestion about how a judgment might be made can have a large influence on how it is made, even if the suggestion is arbitrary or poor. These are the implications, at any rate, of the research into what is called anchoring: the ways that initial points of reference serve as anchors for thoughts that follow them. Half the subjects in an experiment were told that 50,000 people die in auto accidents each year; the other half were told that 1,000 people per year are killed by electrocution. All were then asked to estimate the annual deaths from various other causes. The subjects who started out thinking about the auto accidents tended to give higher estimates than the ones who started out thinking about electrocutions; they evidently used the 50,000 deaths per year in cars as some sort of benchmark to help them with their other guesses.62

We find the same effect even if the subjects aren’t told anything but are merely invited to answer questions that make them think along certain lines. Thus two groups of subjects were asked to estimate the chance of a nuclear war between the United States and the Soviet Union. The ones in the first group were asked to say whether the chance was more or less than 1 percent; the ones in the second group were asked whether the chance was more or less than 90 percent. Then all the subjects were asked to give their own actual estimates. The average from the first subjects was about 25 percent; from the second subjects, about 10 percent.63 And the effect can hold even if the original suggestion is obviously arbitrary. In another study the subjects were told to estimate the percentage of African countries participating in the United Nations. But first the subjects were told whether the correct answer was higher or lower than the number produced by a wheel spun randomly. If subjects were told the answer was greater than 10 percent, they tended to give answers of their own that averaged around 25 percent; if they initially were told the

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The Legal Analyst: A Toolkit for Thinking about the Law
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface vii
  • Acknowledgments xi
  • Part I - Incentives 1
  • 1 - Ex Ante and Ex Post 3
  • 2 - The Idea of Efficiency 13
  • 3 - Thinking at the Margin 24
  • 4 - The Single Owner 37
  • 5 - The Least Cost Avoider 47
  • 6 - Administrative Cost 57
  • 7 - Rents 66
  • 8 - The Coase Theorem 75
  • Part II - Trust, Cooperation, and Other Problems for Multiple Players 85
  • 9 - Agency with Eric Posner 87
  • 10 - The Prisoner's Dilemma 100
  • 11 - Public Goods 109
  • 12 - The Stag Hunt 117
  • 13 - Chicken 126
  • 14 - Cascades 136
  • 15 - Voting Paradoxes 144
  • 16 - Suppressed Markets with Saul Levmore 152
  • Part III - Jurisprudence 161
  • 17 - Rules and Standards 163
  • 18 - Slippery Slopes with Eugene Volokh 172
  • 19 - Acoustic Separation 182
  • 20 - Property Rules and Liability Rules 188
  • 21 - Baselines 198
  • Part IV - Psychology 207
  • 22 - Willingness to Pay and Willingness to Accept- The Endowment Effect and Kindred Ideas 209
  • 23 - Hindsight Bias 218
  • 24 - Framing Effects 224
  • 25 - Anchoring 230
  • 26 - Self-Serving Bias, with a Note on Attribution Error 237
  • Part V - Problems of Proof 247
  • 27 - Acoustic Separation 249
  • 28 - Standards of Proof 257
  • 29 - The Product Rule 273
  • 30 - The Base Rate 281
  • 31 - Value and Markets 294
  • Notes 305
  • Author Index 329
  • Subject Index 335
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