The anchoring effect is a cognitive bias where people rely too heavily on the first piece of information (the “anchor”) when making decisions.

Once an anchor is set, subsequent judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around it.

Examples

• In negotiations, the first price mentioned often sets the tone for the rest of the discussion, even if it is arbitrary.
• When a credit card statement suggests a minimum payment of $25, many people focus on that number and pay only the minimum—even, even if they could afford more.
• Retailers use “original price” tags to anchor perceptions of value, making discounts seem more significant.

Related Concepts

• Adjustment Heuristic
• The Framing Effect

References

• Kahneman, D., & Tversky, A. (1974). Judgment under Uncertainty: Heuristics and Biases. Science.