From ACT Wiki
Jump to: navigation, search

1. Behavioural skills - cognitive bias.

The anchoring effect, or anchoring bias, is a tendency in decision-making to place excessive importance on the first piece of information accessed.

This initial piece of information is known as the anchor.

A common example is the first figure mentioned in a price negotiation.

The reasonableness, or acceptability, of subsequent figures tends - wrongly - to be evaluated by reference to the earlier figure, rather than by objective criteria.

2. Financial modelling - spreadsheets - construction - cell references.

In financial modelling with spreadsheets, anchoring refers to cell references when they're copied around the spreadsheet.

Fully anchored cell references - for example $A$1 in Excel - will stay as $A$1 wherever we copy them within the spreadsheet.

This kind of cell reference is sometimes known as an absolute, fixed or dollarised reference.

Contrasted with a standard relative cell reference - for example A1.

Relative cell references are the default.

See also