Paraguay: Difference between Anchoring and Status Quo Bias? practice, emphasis, original, between, failure

Zesty

My understanding is Anchoring the analyst puts too much emphasis on the first information or the first forecast that was made leading to failure to *fully* incorporate changing conditions; while

Status Quo Bias is to stick with original assumptions/forecast regardless of changing condition.

However, there are many times where I was wrong in the practice exams (i.e. Anchoring when an analyst still sticks to its forecast even when there was a changing condition) and I still don't know whether there are any clear cut rules.


Anyone?



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 07:19PM by Eazy E.

aidebaobao

Status quo seems to favor not changing views and just keeping the same. Object in motion must stay in motion.

Anchoring puts too much credence in prior views and not enough in current views. Object is in motion but has slowed but will speed back up again.

Representativeness is the opposite of anchoring, imo. Object slowed down, now it is really going to slow down.

Bayesian Rigidity uses same views even in the face of new and very conflicting information. I do not believe that the object has slowed down, even if it did slow down it is temporary.



Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 09:45AM by Paraguay.

thommo77

Read the Glossary at the back of CFAI Volume 2:
anchoring trap - the tendency to give disproportionate weight to the first information received.
status quo trap - the tendency for forecasts to perpetuate recent observations

So anchoring favors the first information received while status quo favors the last. It makes sense when you think of the meaning of the status quo. It means the way things are now. So if you have a status quo bias, you think things will not change from the way they are now.

Maybe one way to remember this is to think bothl of these biases will cause your ship to sink. What will hit bottom first? The anchor. Thus anchoring favors the first info received.

lcai

Acronym isn't mine, but for TRAPS think O'CRAPS

I have trouble recalling the R (recalability - how ironic), but it helps that TRaps starts with TR and I start thinking about Arnie in Total RECALL, and if you saw Arnie in a dark ally at night, you really would be going O'CRAP.

nannan66

nailer Wrote:
-------------------------------------------------------
> I think forzajuve got it right. Anchoring is about
> forecasts, status quo is about allocation of
> assets.
>
> Forza Inter!


Sorry please allow me to correct, we have 6 "traps" to remember, all of them are traps of forecast.

Anchoring trap
Status quo trap
Confirming evidence trap
prudence trap
overconfidence trap
recallability trap

while status quo bias is seen in defined contribution pension allocations.

mar350

I think forzajuve got it right. Anchoring is about forecasts, status quo is about allocation of assets.

Forza Inter!

Windjam

”Anchoring is market crashed in 1929 and now I don't wanna invest anymore because I think it will crash again.“



I think this should be recallability trap.

Darien

u right JP , that's the intent in Sample 1 question

mik82

Prudence is you temper your forecasts down because u don't wanna look like an idiot.

Like if I built a model and it said the Apple stock is going to triple in price next year but everyone is saying it will only move up 10%, I temper my forecast down to say 15%



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 09:31PM by JP_RL_CFA.

bkballa

Status quo is giving more weight to resent observations. Market was down last year so it is gong to be down next year.

Anchoring is market crashed in 1929 and now I don't wanna invest anymore because I think it will crash again.

Easy stuff guys