Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
What are some of the fundamental concerns related to the anchoring and adjustment process in negotiation?
Expert Solution
Step 1
Anchoring and adjustment is a phenomenon in which a person's initial thoughts and responses are based on a single piece of information, and later that knowledge is used to make modifications. The anchoring and adjustment heuristic refers to situations in which a person starts with a specific objective number or value as a starting point, or anchor, and then modifies that information over time until it is suitable. When the anchor is significantly different from the true answer, those alterations are frequently insufficient, and the original anchor remains too close to the true answer.
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