Anchors Away: Why the Anchoring Effect Suggests that Judges Should be Able to Participate in Plea Discussions

IntroductionThirty-eight pairs of MBA students at Northwestern University participated in a mock negotiation.1 Researchers designated one student in each pair the seller and the other student the buyer.2 The researchers told each student that the negotiation would involve the sale of a pharmaceutical plant.3 They also told all the students several other facts about the prospective sale: (1) the seller purchased the plant three years ago for $15 million, which was below the market price because the previous seller was in bankruptcy; (2) two years ago, the plant was appraised at $19 million; (3) in the last two years, the real estate market declined five percent, though the plant was unique and possibly immune to the decline; and (4) a similar plant sold nine months ago for $26 million.4The researchers informed the buyer-students that they were CFOs of a company in need of a new plant to manufacture highly specialized compounds.5 The researchers also told the buyers that their best alternative to purchasing the seller's plant was to spend $25 million on building a new plant.6 Meanwhile, the researchers told the sellerstudents that they were selling the plant because their company was phasing out the product that the plant produced.7 The researchers then told the sellers that their best alternative was to strip the plant and sell the equipment for a projected profit of $17 million.8 The major variable was that the researchers told half of the pairs that the seller must make the first offer and the other half of the pairs that the buyer must make the first offer.9The result? In every pair, the students reached an agreement.10 When seller-students made the opening offer, they first offered to sell the plant for an average of $26.6 million; when buyer-students made the initial offer, they first offered to buy the plant for an average of $16.5 million.11 When the opening offer was an offer to sell by a seller-student, the average final purchase price was $24.8 million.12 When a buyer-student opened the bidding, the average final purchase price was $19.7 million.13This $5.1 million difference in average final purchase price can be explained by the "anchoring effect"-an unconscious cognitive bias by which "[p]eople come up with or evaluate numbers by focusing on a reference point (an anchor) and then adjusting up or down from that anchor."14 In the Northwestern study, the opening offer was the anchor, and the problem for the students not making that offer was that people typically do not veer much from their anchors.15 This meant that the choice of the initial anchors had an inordinate effect on the students' final purchase prices.16Many legal bargaining theorists now recognize anchoring as a basic truth of civil negotiations,17 and it seems safe to assume that this same cognitive bias applies to criminal negotiations as well. For example, Professor Stephanos Bibas has argued:The same dynamics [present in civil negotiations] help to explain the course of plea bargaining. For example, a prosecutor might initially offer a robbery defendant twenty years' imprisonment by piling on every plausible enhancement. The defendant, of course, rejects this unreasonable offer out of hand, but the initial offer serves as a high anchor. When the prosecutor comes back with a revised offer of fifteen years, that offer sounds more reasonable. By the time the prosecutor comes down to twelve years, the defendant is ready to jump at the deal. If the prosecutor had started out at twelve years, however, the defendant might have anchored on that number as the highest likely sentence and rejected it as a bad deal.18More than ninety percent of all criminal cases in this country are resolved by plea bargains.19 In the majority of those cases, the prosecutor makes the initial plea offer,20 which is typically high.21 Assuming that the anchoring effect applies to criminal negotiations in the same way that it applies to civil negotiations, this would mean that nearly every criminal case in this country is resolved on the basis of an unconscious cognitive bias. …