ANCHORING AND ADJUSTMENT IN JUDGMENTS UNDER RISK

According to the anchoring and adjustment heuristic, an individual anchors an initial judgment of a stimulus with some of its features and then adjusts that initial judgment to reflect the remaining features. This article examines anchoring and adjustment in the assignment of minimum selling prices (MSPs) to three-outcome gambles. The results of Experiment 1 indicated that people were most heavily influenced by the intermediate outcome in a gamble. On the basis of these results, the following framework was proposed: To forecast what is likely to happen in a play of a gamble, people partition the outcomes into sets based on the similarity of the outcomes. They then form an initial judgment based on the outcomes in the more probable set, which they adjust to reflect the remaining outcomes. Two more experiments show that when one outcome has a probability greater than.50, people do not focus on the intermediate outcome but anchor their judgment with the high-probability outcome.