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.