The anchoring effect describes when decision makers fixate on initial information as a starting point and then, once set, fail to adequately adjust for subsequent information.

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The statement correctly defines the anchoring effect as a cognitive bias that causes individuals to rely too heavily on the initial piece of information when making subsequent decisions, even if new information contradicts or overrides the initial data. This can lead to errors in judgment or decision-making because people fail to update or revise their beliefs based on the most relevant and reliable data. The anchoring effect is a well-documented phenomenon in behavioral economics, psychology, and marketing research, and it can have implications for many areas of life, from negotiation and pricing to investment and healthcare decisions.

The Anchoring Effect Describes When Decision Makers Fixate on Initial