Which of the following best describes the concept of anchoring and adjustment in decision-making?

Anchoring and adjustment is a cognitive bias that refers to the tendency for individuals to rely heavily on the first piece of information they encounter when making decisions and then adjust their estimates based on that initial anchor. The initial value serves as a reference point, which can skew the decision-making process, leading individuals to be overly influenced by that starting point.

In this context, the description that adheres too closely to initial estimates of value aligns perfectly with the concept of anchoring. When a person has an initial anchor, any adjustments made—whether they are increases or decreases—tend to be insufficient relative to the starting point, thereby maintaining a significant influence over the individual's final decision. This can lead to suboptimal financial decisions, as the initial anchor may not reflect the true value or the full range of information available.

The other options describe different aspects of decision-making. For example, making decisions based on the last piece of information received relates more to recency bias. Prioritizing long-term financial goals reflects a strategic approach to financial decisions, focusing more on time horizons rather than cognitive biases. Lastly, relying on a diverse set of data points emphasizes comprehensive analysis, which contrasts with the narrow focus inherent in anchoring and adjustment. Thus, the emphasis on initial estimates