This presentation provides a brief overview of an anchoring experiment we conducted. This experiment shows the impact of using the anchoring effect in business situations (e.g. sales and marketing) and how depending on the individual's prior exposure or acquired knowledge achoring effects can have differing effects.

1. Anchoring Experiment
By
Dr. Ali Fenwick
Head of Behavioral Insights
The power of behavioral science.

2. Customer Briefing
The customer is a high-end automotive company. It is launching a
new electric car (EQC) and it wants to see if it is possible to
influence pricing estimates given by potential customers using
techniques from behavioral science.
The behavioral insights company suggests to use the anchoring effect
to influence pricing estimates (guestimates) of potential clients. Insights
from this study can inform how the client can use anchoring in its
upcoming marketing campaigns.

3. The Anchoring Effect
• A cognitive bias causing individuals to rely on the
first piece of information they receive
• Influences price guessing
• Anchors can lead to sub-optimal decision
outcomes due to the use of false, bias, or even
completely irrelevant information

4. Experimental Design

5. Experimental Design – High Anchor

6. Experimental Design – Low Anchor

7. Experimental Design –Test

8. Demographics
Condition 1 (Opel)
• N = 97
• Female = 58 and Male = 39
• Mean Age = 32.4 years
Condition 2 (Porsche)
• N = 94
• Female = 50 and Male = 44
• Mean Age = 30.4 years
Participants in the survey were executive MBA students based in Dubai and London.
Data was collected during an MBA class in business psychology. All participants had
at least a bachelor’s degree or a Masters in another field than business
administration.

9. Results – Comparison between
conditions
Conditions are homogenous
Amount of women and men per condition are similar (p=.289), as well
as age (p=.225), income (p=.507), and knowledge of cars (p=.548).
However, no homogeneity of variance was found between the two
conditions for interest in buying the car (p.000).

10. Low Anchor versus High Anchor
Low Anchor AVE (Opel) : Mean 63.216 euro (no corrected) –
St. deviation 31.744
High Anchor AVE (Porsche): Mean 81.434 euro – st deviation
38.863 (cMean 79.621 – st. deviation 34.851)
Significant difference between LA AVE and HA AVE
18.218 Euro (16.405 euro for corrected mean)

11. Results Anchoring Experiment
• Significant mean difference
between the low anchor and the
high anchor
• Bigger variability and outliers in
answers provided in the high
anchor condition

12. Significant mean difference between male and female participants in
the low anchor condition.
Opel Female AVE : 57.424 Euro
Opel Male AVE: 72.211 Euro
Anchor Effects on Gender

13. Anchor Effects on Gender
No significant mean difference between male and female participants
in the high anchor condition.
Porsche Female AVE: 76.696 Euro
Porsche Male AVE: 83.023 Euro

14. Results
Mercedes-Benz ECQ Price : 80.000 Euro
Mean difference between the guessed price of the low anchor and the
actual price was significant. However, there was hardly any difference
between the guessed price of the high anchor and the actual price.
sig NS

15. Conclusion
1. The design of the anchoring experiment was able to influence the
price estimations of the new EQC model. There was a significant
difference between the average price estimations provided in the
high anchor and the low anchor. The difference was more than 18K
euro in absolute value.
2. Specifically the low anchor had the biggest effect on swaying price
estimations lower than the actual price. The low anchor influenced
women’s price estimations more than men.
3. The high anchor showed more variability between the answers
provided. Some price guesses were even above the >200K euro.

16. THANK YOU
Ali Fenwick, Ph.D.
Dr. Ali Fenwick (@modern.day.psychologist)
afenwick@leadtcml.com
@DrAFenwick
+971 56 675 9790