Psychology & Behavior4 分で読めます

The Anchoring Effect

Have you ever missed the timing to buy or sell because "the price I bought at" or "last year's high" kept circling in your head? That's less your fault and more that the human brain drops an anchor on the first number it sees.

What Is the Anchoring Effect

The anchoring effect is a cognitive bias in which the first number or piece of information you encounter becomes a "reference point (anchor)" and pulls subsequent judgments toward it. Just as a ship that drops anchor can move only within the length of its rope, our judgment cannot stray far from that first number.

This concept was formalized by psychologists Amos Tversky and Daniel Kahneman in a 1974 paper. We usually start from the anchor and "adjust" toward an answer, but this adjustment is insufficient, so we end up giving an answer skewed toward the anchor.

Anchoring is counted among the most powerful and repeatedly verified psychological phenomena. Even experts are affected—even when the anchor is an irrelevant number.

The Roulette Experiment: Hooked by Any Number

Tversky and Kahneman's classic experiment is famous. In front of participants, they spun a rigged roulette to land on 10 or 65, then asked, "What percentage of UN member states are African countries?"

The group whose roulette stopped at 10 estimated about 25% on average, and the group that got 65 estimated about 45%. Even though the roulette number had nothing to do with the question, the number they had just seen pulled the entire answer.

Applied to investing: a single past number like "Samsung Electronics was once 90,000 won" comes to dominate your judgment of whether the stock is expensive or cheap now.

Two Anchors You Often Get Caught On in Investing

First, the "purchase-price (break-even) anchor." The price you bought at becomes the reference point, making you delay cutting losses until you recover your break-even. When combined with loss aversion, it easily lets losses grow larger.

Second, the "all-time-high anchor." Last year's high or the 52-week high becomes the reference, so even when good news comes out, you react slowly, thinking "it's still far from the high" or "it's already all the way there." A study by George & Hwang published in the Journal of Finance in 2004 empirically showed that investors tend to underreact to information by using the 52-week high as a reference point, and reported that this phenomenon is also observed in about 20 international markets.

This is not recommending a particular trading strategy but introducing an "academically observed bias." The all-time high and break-even are not buy or sell signals.

How to Loosen the Anchor

You cannot eliminate anchoring entirely, but you can keep your judgment from being tethered to a specific number.

First, use a "rule" rather than a "price" as your reference. Recurring investing (buying regularly by splitting the same amount each month) scatters the single anchor of a purchase price across the average of many points in time.

Second, replace the question of the past high or break-even with a future time horizon (for example, is this an asset I would hold even 10 years from now?).

Third, check the maximum drawdown and recovery period in advance. If you plant the fact that "this asset has historically experienced -30% to -50%" as an anchor, you can reduce the mistake of hastily selling in a crash, pulled by the break-even anchor.

よくある質問

Q. Does the price I bought at really mean nothing?

The purchase price matters when calculating taxes and returns. However, it is logically irrelevant to "whether it will rise or fall going forward." The market does not know what price you bought at. Even so, obsessing over break-even makes you hold onto assets with a low chance of recovery, or, conversely, sell as soon as they rise a little.

Q. Don't experts avoid getting caught by anchoring?

Unfortunately, no. Research shows that experts such as real-estate appraisers, judges, and analysts are also affected by anchors. That said, some research shows that those who rely more on rules and data, like institutional investors, have relatively smaller bias. The key is not the confidence that "I won't get caught," but building procedures that keep your judgment from being tethered to a single number.

Q. What does it mean that recurring investing reduces anchoring?

If you buy all at once at one price, that price becomes a powerful single anchor. But if you buy in installments each month, your purchase points scatter across many times, so "the price I bought at" softens into a single average. This does not guarantee future returns—it means it reduces the degree to which you get psychologically tethered to a specific number. You can check the effect of spreading out timing directly with the site's recurring-investment simulator.