What is the main characteristic of the anchoring effect?

The anchoring effect primarily refers to the cognitive bias where individuals rely too heavily on the first piece of information they encounter (the "anchor") when making decisions. This phenomenon illustrates how initial information can heavily sway later judgments and decisions, even when it is unrelated to the decision at hand.

In various contexts, such as negotiations or estimations, the first figure presented (like a price or a statistic) serves as a baseline. People tend to adjust their subsequent estimates or decisions around this anchor, often giving it disproportionate weight. For instance, if someone learns that a car’s initial asking price is $30,000, they might evaluate subsequent deals based on this anchor, even if those deals are objectively better or worse.

The other options do not capture the essence of the anchoring effect. Influencing judgments based on irrelevant information may overlap with anchoring but does not specifically address the importance of the initial information. Making decisions based on the most recent information reflects recency bias, while the idea of avoiding risk at any cost pertains to risk aversion, a different concept altogether. Thus, recognizing how initial information shapes decision-making through the anchoring effect is crucial in understanding cognitive biases.