Ubiquitous in behavioral finance

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We have all been guilty of anchoring bias, something ubiquitous in behavioral finance. Many decisions we make daily hold a basis of anchoring bias. Our brains are trained to depend too much on pieces of information of an anchor. Consequently, we fixate on the anchor (any part of the information, whether it is data, stocks, financial statements, investment opportunities, etc.) to make an "informed decision."

Working in higher education, we repeatedly use this as we enroll students closer to the start of courses. For example, we phrase the recruitment interview very differently than the student who enrolled with us weeks before. We use verbiage like "our team is taking a preliminary look into your FAFSA history, and you could potentially be registered for courses by the end of the day." Our financial aid team takes a peek into their borrowing of financial assistance history to see if there are any red flags or indicators that their FAFSA will be rejected for any reason. Our financial aid advisor will give them a "pre-acceptance to the University" until their full FAFSA report arrives with their illegibility. We are essentially deciding based on a few indicators in their borrowing history.

What is your THOUGHT on the statement above?

Reference no: EM133232651

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