Vsauce! Kevin here. And you are lying to yourself… basically
all day long. You don’t even know it! And sometimes other people are conspiring
to steer your mind where it shouldn’t go. You get patterns wrong. You get numbers wrong. You get prices and values wrong. And it’s totally not your fault. Right? Wrong! It’s why 40,320 is actually greater than
40,320. Wait, huh? Ok, I’ve got two very simple math problems
here under these papers, A and B. Choose the one you want to solve. Choose right now. Do you wanna solve A or do you wanna solve
B? Go ahead. Okay now that you’ve chosen, when I remove
the papers to expose the problems, you’ll have exactly 5 seconds to solve the one you
chose. And if you don’t have enough time to solve
it, you can just estimate the answer. Ready? GO. TIME’S UP. Alright, let’s be honest -- virtually no
one was able to multiply those numbers fast enough, at least not accurately. But what about your estimates? We know that 1x2x3x4x5x6x7x8 and 8x7x6x5x4x3x2x1
are the exact same problem. Because of the commutative property, which
is like a times b equals b times a, it doesn’t matter what order we multiply the terms. Start small, get bigger? Start big, get smaller? It makes no difference, same result. But in a 1974 article called Judgment Under
Uncertainty: Heuristics and Biases, Amos Tversky and Daniel Kahneman revealed that the group
who tried to solve Problem A -- multiplying with the small numbers first -- had a median
estimate of 512. Group B, who started by multiplying larger
descending numbers? Their median estimate was 2,250 -- over 4x
higher than A. Just because the order of the numbers was
different? That seems weird! No, that’s normal. We do this all the time and just don’t know
it! Oh, also, the actual answer to this problem
is, as you may have guessed, 40,320. So both groups were way off each other and
way, way off the truth. The fact is: whether you started with big
numbers or small numbers, you were anchored into a mode of thought that depended on your
initial information. Anchoring is a cognitive bias that basically
sets the tone for how you think about something… and it can be really tough to break out of
it or consider other relevant factors. Like video game prices. I recently got into a teeny tiny Twitter argument
about how $70 games now are actually cheaper than the prices of video games 20 years ago. Paying $60 bucks in the year 2000 was actually
$90.69 in real dollars. But we’ve all been anchored into video game
pricing -- even ignoring inflation, we didn’t talk about how games also now take longer
to develop, with way more staff, and the technology itself is a lot better with 4K graphics and
smooth framerates, wireless controllers, full games you can buy, download and play basically
right away from your couch without having to beg your mom to drive you to KBToys at
the Southside Mall in Oneonta an hour round trip in a sudden snowstorm to get a game you
know next to nothing about aside from having drooled over the same 10 screenshots in GamePro
magazine for the last six months. But that game was Xenogears and it was totally
worth it! And anchoring happens with stuff like movies. How a movie opens and ends -- bookend anchoring
-- has a stronger influence on what you think of it. Have you ever heard someone say, “Yeah,
the beginning and end of that movie were terrible, but the middle was really good!” No. COIN FLIPPING. Massimo Piatelli-Palmarini flipped a coin
7 times. And the outcome was one of these three sequences: Heads Heads Heads Heads Tails Tails Tails
Tails Heads Heads Tails Heads Tails Tails Tails Tails Tails Tails Tails Tails Tails The question is. which one was most likely to be the real outcome? Let’s say you had to bet on it -- it cost
you $10 if you were wrong and you were right you won $30. When a group was polled, the top choice was
sequence 2, followed by 1, and then 3 -- for all the wrong reasons. The probabilities of all three sequences are
exactly the same, because each coin flip is an independent event with 50/50 odds of heads
or tails. 7 tails in a row is just as likely to occur
as the mix of T’s and H’s in the 2nd series -- but since we’re anchored into thinking
there’s typically an alternating mix of heads and tails in a sequence of 7 coin tosses,
we wrongly believe it’s actually more likely. EHHHHH. DICE. I’ve painted 4 sides of this die green and
the other two sides red. Same betting terms as the coin flip game.. Lose $10 if you’re wrong, win $30 if you’re
right. Which outcome is more likely? Red Green Red Red Red
Green Red Green Red Red Red Green Red Red Red Red Red When people were polled, choice preferences
also went 2, 1, and 3… and that is weird. None of the 3 sequences are that common because
they’re so red-heavy, and red is only 2 of the 6 sides of the die. But our cognitive bias tells us to choose
the 2nd sequence because it’s got a nice little mix…I don’t know why.. I don’t know why I did that… it’s got
a nice little mix of red and green… even though the first sequence is actually contained
in the second one. Look at this! Red green red red red. Red green red red red. Why would it be easier to add an additional
throw to make the sequence more likely? It isn’t! The more throws you make, the less likely
you are to hit that exact sequence. HERE’S THE MATH. We’re just multiplying the odds of 1/3 for
red and 2/3 for green -- but check out the relative probabilities. Just one swap from red to green in sequence
#2 DOUBLES the probability of sequence #3… and not requiring that extra green throw in
#1 makes it about 60% more likely to happen compared to sequence #2. ANCHORING COSTS YOU REAL MONEY. The next time you’re shopping and you see
something that’s $19.99? Yeah, $20 sounds a lot more expensive even
though it’s just a penny difference -- but that $0.99 also anchors you into thinking
about the price in an interval of PENNIES, so sales of WHOLE DOLLARS off seem more appealing. Look. If a car’s sticker price is $18,000 even? You might counter with $15,000 even. But a car at $17,800 anchors you into countering
in hundreds, not thousands. I began this video with that multiplication
example because it's the clearest illustration of how anchoring bias can lead two groups,
with the same information just presented differently, to reach totally different conclusions, BOTH
of which were dramatically wrong. Anchoring is a good thing. It’s a first impression. We have to start somewhere if we’re ever
going to process any information in a meaningful or efficient way. But it can definitely lead you down the wrong
path. And without recognizing what it is and isn’t
-- you just have no hope of overcoming its effects. But. By acknowledging anchoring bias you’re armed
with the ability to choose how much weight to give it. You can stick with the good, accurate anchors
that lead you down the right roads and you can transcend those that otherwise would have
caused you to get it really wrong. The truth is… that depending on the question,
the real right answer might still be floating around waiting for someone, someone like you,
to finally anchor it. And as always - thanks for watching.
