A new study from the Annenberg School for Communication shows how herding in networks makes populations more rational.
2 min. read
In 2010, the New York City-based restaurant Serendipity 3 revealed its $69 hot dog, winning the Guinness World Record for the world’s most expensive hot dog. Served on a toasted pretzel roll with truffle butter and covered in foie gras, the award-winning hot dog made the restaurant’s $18 cheeseburger seem like a steal. And that’s the point, says Annenberg School for Communication’s Damon Centola.
“If you put an absurdly expensive item on the menu, it anchors people’s expectations,” Centola says. “A $69 hot dog makes an $18 cheeseburger seem reasonable by comparison.” And it works: once Serendipity 3 introduced its $69 hot dog, cheeseburger sales skyrocketed.
In a new study published in the Journal of Social Computing, Centola, the Elihu Katz Professor of Communication, Sociology, and Engineering, and Annenberg doctoral candidate Calvin Isch tested whether groups that were initially subjected to anchoring bias could recover their ability to make rational decisions as a result of exchanging their opinions within peer networks.
In an experiment involving 1,600 people, Centola and Isch showed participants a photo of 246 pennies in a pile and asked them to guess the number of coins. Participants either worked alone (as solitary individuals) or as members of connected networks. To establish an anchor, participants were first assigned either a low (118) or high (353) anchor value and asked to indicate whether there were more or fewer pennies than this anchor. After answering this question, participants were then asked to estimate the number of coins in the pile.
The anchors worked just as predicted. Without any anchor, participants’ median guess was 185 pennies. With the low anchor, the median guess dropped to 141, becoming less accurate (as a result of the harmful anchor), but with the high anchor, the average guess jumped to 200, moving closer to the actual number (a result of the helpful anchor).
The findings indicate that anchoring bias is not always negative—it’s context-dependent, and so are the effects of networks.
“It’s a useful lesson for online networks. Sharing opinions in an egalitarian way enables even explicitly biased populations to overcome biases that are impossible for individuals to escape on their own,” Centola says.
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