A store marks a jacket at $200, then ‘discounts’ it to $120. You feel like you’re saving $80. But if it was always $120, you’d think it’s expensive. The $200 anchor changed your perception.
The Original Discovery
Tversky and Kahneman’s famous studies in the 1970s. They asked people ‘Is the percentage of African nations in the UN higher or lower than 65%?’ Then asked them to estimate the actual percentage. The 65% (random) number anchored all estimates—people who saw 10% estimated much lower, those who saw 65% estimated higher.
How It Works in Real Life
The Anchoring Effect isn’t a rare phenomenon—it’s everywhere once you start looking:
- In salary negotiations, whoever mentions the first number wins. If you say $100K and they say $80K, you’ll likely end up closer to $90K. If you stay silent and they anchor at $70K, the final is much lower.
- You see a house listed at $500K. When it drops to $450K, it feels like a deal. If it was always listed at $450K, the same price feels overpriced. The anchor changed perception of value.
- A wine is described as from a ‘prestigious year’ before tasting. People rate it higher than the identical wine described as from a ‘typical year.’ The anchor (prestigious) changed perception of taste.
Why This Matters to You
Anchoring Effect is why negotiations start with the highest or lowest number first. In salary talks, in real estate, in any negotiation, the first number mentioned disproportionately influences the outcome. It’s also why prices are anchored with ‘original prices’ or ‘competitor prices’—the anchor makes everything else seem reasonable. If you’re selling, anchor high. If you’re buying, anchor low. Be aware of anchors in your own decisions and try to question the first number you see.
See It in Action
Play Mind Traps to see if you can recognize the Anchoring Effect in the wild. The quiz forces context-based recognition—the hardest and most useful form of learning.
Related Reading
How to Use Anchoring in Your Favour
Once you understand anchoring, you can apply it deliberately — in negotiations, pricing, and persuasion.
In salary negotiations: Name your number first, and name it high. Research shows the first figure mentioned has outsized influence on the final outcome. If you wait for the employer’s offer, they anchor the conversation. If you go first with a well-researched, ambitious number, you shift the midpoint in your favour.
In pricing your own products: Always show a higher price before the actual price. A product at $97 sells better when shown next to a $197 “premium” option than when shown alone. The $197 anchor makes $97 feel reasonable even if $97 was always the intended price.
In persuasion: Frame your request against a larger ask first. If you want someone to volunteer for 2 hours, first ask if they’d consider 10 hours. When they decline, asking for 2 hours feels small by comparison. This is the door-in-the-face technique — a deliberate application of anchoring.
How to Defend Against Anchors
Knowing about anchoring doesn’t fully protect you from it — studies show even people who know about the bias are still influenced by irrelevant numbers. But awareness helps.
Generate your own anchor first. Before entering any negotiation or seeing any price, write down what you think is fair. Once you have your own number, external anchors have less power over you.
Ask: what would this cost if the anchor didn’t exist? When a product is “marked down from $500 to $300,” force yourself to evaluate whether $300 is a good price on its own. Ignore the $500. What would you pay for this item if you’d never seen the original price?
Slow down. Anchoring is most powerful when you’re deciding quickly. Deliberate, slower evaluation reduces (though doesn’t eliminate) the effect of anchors on your judgment.
Frequently Asked Questions
Does anchoring work even with obviously random numbers? Yes, and this is what makes it strange. In Tversky and Kahneman’s original study, the anchor was a spinning wheel of fortune — participants knew it was random, yet it still influenced their estimates. The human mind latches onto numbers even when they are explicitly arbitrary.
Is anchoring manipulation? Like most cognitive biases, anchoring is a natural feature of human cognition that can be used ethically or exploitatively. Showing a “was $500” price for a product that was never sold at $500 is deceptive. Setting a high initial asking price in a negotiation is standard practice. The ethics depend on context and honesty.
Do experts fall for anchoring? Yes. Studies have shown that experienced real estate agents, judges, and doctors are all influenced by anchors. Expertise reduces but does not eliminate the effect. This is why structured decision-making processes — checklists, formal criteria — exist: to reduce reliance on intuitive judgments that anchors can distort.
From My Own Life
When negotiating my apartment lease renewal, the landlord opened with a 15% increase. I eventually got it down to 5%. I felt like I had won. Later, I realized I had never questioned whether a 5% increase was itself reasonable — I had just been grateful to escape 15%. The first number had anchored the entire conversation. Now I refuse to respond to the anchor. I state what I think is fair first.
See all 40 psychology laws: Complete Index →
Leave a Reply