A Level Economics AQA Practice Exam

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The concept of Anchoring refers to:

The reliance on initial information when making judgments
The inability to change perceptions over time
The tendency to avoid numerical data in decision-making
The adjustment of priorities based on social influence

The correct answer is: The reliance on initial information when making judgments

The concept of anchoring is fundamentally about how people tend to rely heavily on the first piece of information they encounter when making decisions or judgments. This initial information serves as a reference point, or "anchor," and can heavily influence subsequent evaluations and choices, even when that initial information may be arbitrary or irrelevant. For example, if someone first hears that a car costs $30,000, they may perceive a car priced at $25,000 as a good deal simply because it is lower than the anchor price of $30,000, regardless of the actual value of the car. This psychological phenomenon illustrates why initial impressions and data can be so impactful in decision-making processes, demonstrating the importance of context and cognitive biases in economics and behavioral science.