Anchoring

Examples

Rosa is selling her used car and lists it at a hopeful price.

Rosa: “I’m asking 9,500.” Buyer: “That’s steep. I could do 8,800.”

The buyer felt shrewd knocking 700 off — but the negotiation happened entirely in the neighborhood Rosa chose. Had she listed at 8,500, the same buyer would likely have countered near 8,000.

Online shopping runs on anchors:

Product page: “$199 Now $89!”

Whether $89 is a good price for the item is a question most of us never ask. We ask whether it’s a good price compared to $199 — a number the seller invented for exactly that purpose.

Why it happens

When you estimate under uncertainty, you rarely compute from scratch; you start somewhere and adjust. The trouble is that adjustment is usually insufficient — your final answer stays biased toward the starting point. Even anchors people know are uninformative (a number spun on a wheel, in the classic experiments) drag estimates toward them, and the effect is one of the most consistently replicated findings in psychology.

Knowing about anchoring doesn’t switch it off. Experts negotiating in their own field still anchor on the first offer; the bias operates on the estimate itself, not on your confidence about it.

How to counter it

• Generate your own number first. Decide what the car, salary, or house is worth before you hear anyone else’s figure.
• Interrogate the anchor: “Where does that number come from? What’s it based on?” An anchor with no justification deserves no pull.
• Consider the opposite extreme. Deliberately ask “what would make the true value much lower (or higher)?” — thinking through opposing reasons loosens the anchor’s grip.
• In negotiations, don’t fear making the first offer — anchoring works for you too. But make it defensible, or it invites pushback instead of pull.

Anchoring is about numbers pulling estimates; when the wording of options (gains vs. losses) shifts your choice instead, that’s the framing effect.