Belief inducing and anchoring effect: A lab experiment

This paper reports results from a two-stage experiment designed to examine anchoring effect of induced beliefs. In stage 1, we induce subjective belief of one´s ability by randomly assigning wage for task performance. Results show that low wage individuals exhibit lower expectation on their performance. In stage 2, participants take part in a bargaining game, we find depressed individuals have significantly lower reservation price than others. We conclude that initial settings anchor individual´s expectation thus have more profound impact on one´s economic behavior and outcome.