Imagine this scenario...
My manager needs me to estimate how long it'll take to implement some new feature. On the surface, it looks completely straight-forward, and I know my manager is thinking it's about a day's worth of work. I know, unfortunately, that under the covers it's not that easy - there's actually a fair amount of plumbing code to write, and after breaking things down into subtasks, etc., I guess it'll take me about 55 hours to implement. The question is: how do I gracefully communicate this estimate to my manager in a way that makes him feel that this is a reasonable estimate.
Beyond the obvious answers (e.g. show him detailed estimates, get another opinion, etc.), there's a simple decision theory trick that might work, something that neuro-marketers use to get you to pay more for their products: use an anchor.
Basically, whenever we're asked to assess the value of some thing (whether a cup of coffee or the number of hours to implement some new software feature), we use the value of other similar things to orient ourselves. For example, we may not know how much X is worth, but if we know X is worth more than Y, and Y is worth $Z, then obviously X is worth more than $Z.
This all seems pretty rational, right?
The problem is that we often take the value of our anchor (Y) for granted - so if the anchor is off, so too will be our valuation. In decision theory lingo, this is called arbitrary coherence.
Movie theaters manipulate this to perfection. When I go to the snack bar, I think: "if I can get a 12 ounce Coke for $3 and a 16 ounce coke for $4, it must be an amazing deal to get a 32 ounce for only $4.25. Woohoo!". Of course $3 for 12 ounce coke is a total rip, but it makes $4.25 for 32 ounces look like a bargain.
But wait, we're even more irrational than that...
Apparently, the anchor doesn't even have to be a relevant comparison point at all to bias our decision - it can be completely unrelated. In a study by Dan Ariely of MIT, a class of MBA students was first asked to write down the last two digits of their social security number on a piece of paper. Next they were shown a series of products for which they would write their willingness-to-pay for those products on that same piece of paper. There's no reason to think that a person's social security number would have anything to do with how much they would pay for some arbitrary products, but incredibly that's exactly what he found. The students with higher numbers for the last two digits of their SSN were willing to pay substantially more money than those with lower numbers. They used their completely irrelevant SSN as an anchor.
So...back to the my original question then - how should I communicate that estimate to my manager? Maybe I could use some sort of anchor. Like...
Hi Bob -
I did a little research, and this looks similar to feature X that I implemented a few months back which ended up taking me 70 hours to implement, so I'd estimate 55 hours of work. Thanks.
If the theory is correct, Bob will use the 70-hour data point, prima facie, as an anchor from which to judge whether 55 hours is a reasonable amount of time for me to finish the feature. Had the anchor been 30 hours, 55 hours might seem excessive to him. Going further, maybe I could even try this...
Hi Bob -
My grandmother is 91 years old and I think it'll take me 55 hours to implement that feature. Thanks.
Ok, probably not.
Anyway, let me know what you think. This might be a contrived example, but do you think setting anchors could help adjust expectations when giving estimates? Or could they be useful elsewhere?