Anchor Bias in Decision Making While You set a day for a Shopping Trip

Anchor Effect - Where you plant a number in someone's mind and change their way of looking at things

Simple example is the above image where you sell something at $199, by just showing a big number to someone like $500 , this $500 has just a simple role of planting that big number in buyers mind and nothing else.

Lets see another example where you want DONATION

I want donation from someone for some cause and do not want to force them with an exact number here are two ways to do it

Option 1 : Sir, We are doing XYZ for poor children, some donation from you will help!, how much would you like to contribute ?

Option 2 : Sir, We are doing XYZ for poor children, some donation from you will help! . A lot of people have donated their 1 week salary , which is equal to Rs 10,000 , but you can donate whatever you want !

The Guy - Rs 10,000 seems too much to me right now , I can do maximum Rs 1,000 .

You - Fine , any amount is good for poor children

So you got Rs 1,000 because you anchored the person subconsciously with Rs 10,000 and that is used as benchmark for taking decision.

So anchoring is just a trick to plant a number in other's mind so that you are benefitted.

Another example is this

    Client - Hey financial advisor, What is your fees ?

    Advisor - Rs 10,000

    Client - What ! .. thats too much !

NOW with Anchor Effect

    Client - Hey Financial Advisor - Whats your fees ?

    Advisor - Rs 50,000

    Client - What ? Are you kidding me ?

Advisor - You should be thankful, if this was US , you would be paying $1,000 per hour, thats Rs 60,000 per hour and given you need to work for at least 20 hours for a project , its Rs 12 lacs . In India its damn cheaper to work with financial advisors , from that angle, Rs 50,000 is nothing in India , provided we do much better work then US counterparts

    Client - Come on , this is just insane, no one will pay that much in India

    Advisor - What do you think is right number in India ?

    Client - Rs 15,000 - 20,000 is maximum one will pay ? I can not go beyond Rs 15,000 ?

    Advisor - hmm.. Fine - Lets go ahead

Robbery in Guangzhou, China! Interesting!

The robber shouted to everyone: "All don't move, money belongs to the state, life belongs to you".

Everyone in the bank laid down quietly.

This is called "Mind Changing Concept --> Changing the conventional way of thinking".

One lady lay on the table provocatively, the robber shouted at her "Please be civilized  This is a robbery and not a rape!"

This is called "Being Professional --> Focus only on what you are trained to do!"

When the robbers got back, the younger robber (MBA trained) told the older robber (who is only primary school educated), "Big bro, let's count how much we got", the older robber rebutted and said, "You very stupid, so much money, how to count, tonight TV will tell us how much we robbed from the bank!"

This is called "Experience --> nowadays experience is more important than paper qualifications!"

After the robbers left, the bank manager told the bank supervisor to call the police quickly. The supervisor says "Wait, wait wait, let's put the 5 million RMB we embezzled into the amount the robbers robbed".

This is called "Swim with the tide --> converting an unfavorable situation to your advantage!"

The supervisor says "It will be good if there is a robbery every month".

This is called "Killing Boredom --> Happiness is most important."

The next day, TV news reported that 100 million RMB [The renminbi (RMB) is the official currency of China (People's Republic of China)] was taken from the bank. The robbers counted and counted and counted, but they could only count 20 million RMB. The robbers were very angry and complained "We risked our lives and only took 20 million RMB, the bank manager took 80 million RMB with a snap of his fingers. It looks like it is better to be educated to be a thief!"

This is called "Knowledge is worth as much as gold !"

The bank manager was smiling and happy because his loss in the SINOPEC [China Petroleum & Chemical Corporation, or Sinopec Limited, is a Chinese oil and gas company based in Beijing, China] shares are now covered by this robbery.

This is called "Seizing the opportunity --> daring to take risks!"

Conversation Between a Boy and a Lady on BSNL

I'm watching my favorite show (Koffee With Karan ;)) on TV, when the phone rings.

There's an agitated lady on the phone.

Lady: "Hello? BSNL? My phone has not been working for...."

Me (interrupting) : "I think you have the wrong number"

Lady: "Oh! I'm sorry..."

and I hang up the phone. 3 seconds later, it rings again. It's the same lady.

Lady: "Hello? BSNL? My phone is not working..."

Me: "Ma'am, the number you are dialing is the wrong number!", and hang up the phone.

I return to the TV show. It's a juicy episode with Rakhee Savant, and she's bitching about Kareena. And the phone rings again.

Lady: "Hello? BSNL? Listen, don't play games with me, OK? I know this is the right number. Don't try to avoid me. Do you know who I am?"

I realized that this lady was not going to let me watch the show unless someone listened to her complaint.

Me: "Welcome to BSNL's automated fault booking service. To continue in English, press one."

beep

The lady had actually pressed the '1' on her dial pad. Interesting. I thought I'd have some fun.

Me: "To register a complaint, please press the last 5 digits of your Driving License number after the beep. BEEP"

I can hear the lady furiously rummaging through her bag looking for her Driving License. After a while

beep-beep-beep-beep-beep

She had actually found it pretty fast.

Me: "Because of all the SPAM we have been receiving, we will now perform a check to see if you are human. Please enter the result of 35 multiplied by 4 divided by 12"

I can hear the lady shouting out to someone in the background.

Lady: "Prakash, quick! What is 35 times 4 by 12?"

Prakash: "What? Why do you need that?"

Lady: "I'm registering a complaint for our dead phone"

Prakash (sounding somewhat confused): "But why would you need..."

Lady: "JUST ANSWER THE DAMN QUESTION"

Prakash: "err..it's...aaaa...elevent point....errr..."

beep-beep

The lady actually enters 1-1 on the dial pad.

Me: "Your complaint has been registered. Thank you for calling BSNL"

The lady sounds pleased. I can hear her speaking to "Prakash"

Lady: "I like BSNL. They have such a high tech system. They didn't even have to ask me for the number of our landline that is dead. Cool!

Read and Laugh Out Louder - The Story of Donkey, Farmer and Raju

A city boy, Raju, moved to the country and bought a donkey from an old farmer for Rs 100.00. The farmer agreed to deliver the donkey the next day.

The next day the farmer drove up and said, "Sorry son, but I have some bad news, the donkey died last night."

Raju replied: "Well then, just give me my money back."

The farmer said: "Can't do that. I went and spent it already."

Raju said: "OK then, just unload the donkey.."

The farmer asked: "What ya gonna do with him?"

Raju: "I'm going to raffle him off." (Note: To raffle is to sell a thing by lottery - draw lot - to a group of people each paying the same amount for a ticket)

Farmer: "You can't raffle off a dead donkey!"

Raju: "Sure I can. Watch me. I just won't tell anybody he's dead."

A month later the farmer met up with Raju and asked, "What happened with that dead donkey?" Raju: "I raffled him off. I sold 500 tickets at two rupees a piece and made a profit of Rs. 898.00."

Farmer: "Didn't anyone complain?"

Raju: "Just the guy who won. So I gave him back his two rupees."