Behavioral Game Theory

The anchoring effect recognizes that people's judgements (and choices) can be biased by things they come across before making the judgement. The most well known discussion of the anchoring effect is due to Ariely, Loewenstein and Prelec and their paper entitled 'Coherent arbitrariness: Stable demand curves without stable preferences' . Through six experiments they showed that valuations and experiences can be influenced by arbitrary anchors.     The first experiment that they discussed is the one that typically grabs the headlines. Subjects were shown six different products - a computer mouse, keyboard, average wine, fine wine, Belgian chocolates and a book. Having been introduced to the products, subjects were asked if they would buy each product for a dollar amount equal to the last two digits of their social security number. So, if the last two digits of your social security number are 52 you would have needed to say whether y...