Higher or lower? Examining Germany's susceptibility to anchoring bias on the basis of cultural dimensions

Abstract

As the intercultural environment in organizations increases, so does the importance of understanding how cultural factors influence human behavior. That cognitive biases sometimes hinder people from making rational decisions is widely known. Certain biases are particularly important for managers, both to avoid them or to use them to their advantage. For example, anchoring can steer negotiations in the desired direction.Literature showed that biases vary from culture to culture. However, the understanding of how cultural dimensions predict susceptibility to anchoring is still limited. Existing literature in this area is subject to ecological fallacy of inferring individual behavior from aggregate data. Instead, this dissertation is the first to measure five culture dimensions at the individual level and link it to anchoring bias through primary data.This study, conducted in Germany with over 1,000 participants, used a correlational approach to show that susceptibility to anchoring bias can increase with higher levels of Power distance and Uncertainty avoidance as well as lower levels of Long-term orientation. Masculinity and Collectivism were also examined but showed no significant effect on Anchoring. Managers can use these insights to identify the culture's susceptibility to anchoring and target markets exhibiting these patterns to improve pricing, negotiation strategies, and marketing campaigns.

Date of Award	27 Jun 2023
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Filipa de Almeida (Supervisor)