Anchoring in Financial Decision-Making: Evidence from the Field

This paper analyzes 12,596 wagering decisions of 6,064 contestants in the US game show Jeopardy!, focusing on the anchoring phenomenon in financial decision-making. We find that contestants anchor heavily on the initial dollar value of a clue in their wagering decision, even though there exists no rational reason to do so. More than half of all wagers occur within $500 of the initial dollar value, although the maximum possible wagering value averages $5,914. This anchoring phenomenon remains statistically significant on the one percent level, even after controlling for scores, clue category, time trends, and player-fixed effects. When exploiting within-player variation only and implicitly controlling for a host of individual behavioral attitudes and preferences, raising the anchoring amount by 10 percent translates to an increase of 3.1 percent in the wager. In terms of magnitude, anchoring is marginally more pronounced for women with an elasticity of 0.34 versus 0.28 for males. Finally, this paper is among the first to investigate anchoring among children and teenagers. We find little evidence for anchoring among children under the age of 13, but the effect begins to emerge for teenagers and further manifests itself among college students. Overall, our findings suggest anchoring plays a substantial role in financial decision-making under pressure.