The Anchoring Effect

The anchoring effect is a well-documented cognitive bias in psychology where people rely too heavily on the first piece of information they encounter, known as the "anchor," when making decisions or judgments. Once an anchor is set, all subsequent thinking tends to revolve around it, even if it is irrelevant or arbitrary. This bias subtly shapes our perceptions, choices, and even our sense of value.

How the Anchoring Effect Works

When we are presented with a number, estimate, or reference point, our brains automatically use it as a starting point. We then make adjustments from that anchor to arrive at a final decision. The problem is that these adjustments are often insufficient, and we remain tethered to the anchor more than we realize.

For example, if you first see a coat priced at $500, then see another for $200, the second coat may seem like a bargain, even if it is still overpriced for its quality. The initial $500 figure sets an unconscious reference point that influences how you judge the second price.

Real-World Examples of Anchoring

• Retail Pricing: "Was $99, now $59" plays directly on anchoring. The higher "original" price makes the sale price feel more attractive.


• Negotiations: The first offer in a salary discussion or business deal can frame the entire conversation, often pulling the final agreement closer to that opening figure.


• Legal Judgments: Research has shown that even unrelated numbers, such as a random spin of a wheel, can influence sentencing recommendations by jurors or judges.


• Everyday Decisions: If someone tells you that a charity’s average donation is $100, you are more likely to give closer to that amount, even if you originally intended to donate less.

Why the Anchoring Effect Happens

Psychologists Amos Tversky and Daniel Kahneman first described the anchoring effect in the 1970s as part of their pioneering work on heuristics, which are mental shortcuts our brains use to simplify decision-making. Anchoring happens because our minds latch onto initial information and then make adjustments that are often too small.

It is also reinforced by confirmation bias. Once we have an anchor, we tend to look for information that supports it and ignore data that contradicts it.

How to Reduce the Anchoring Effect’s Influence

1. Seek Multiple Data Points: Look at a range of sources before making a decision.


2. Delay Judgment: Avoid committing to a decision too quickly after receiving the first figure or fact.


3. Consider the Source: Ask whether the anchor is relevant and credible.


4. Use Counter-Anchors: In negotiations, present your own starting figure to shift the reference point.

Why It Matters

Understanding the anchoring effect is more than an academic exercise. It can help you become a more rational decision-maker in everyday life, from shopping and investing to hiring and negotiating. Recognizing when you might be anchored allows you to step back, question initial information, and base your choices on evidence rather than impulse.

In short, the anchoring effect is a powerful psychological phenomenon that shapes how we think and decide, often without us realizing it. By learning to spot it, you can take back control over your judgments and make more informed choices.