When you see a price tag in a store that reads “List price 100,000 won → Today only 60,000 won,” the same 60,000 won suddenly feels like a pretty good deal. In a salary negotiation, if the other side names a high number first, the conversation that follows tends to stay close to that number. The first number we hear lingers as the reference point for the judgments that come after it. This is the anchoring effect.
Put simply, the anchoring effect is “a cognitive bias in which the first number or piece of information we encounter pulls our later estimates and decisions toward it.” In a 1974 paper, Amos Tversky and Daniel Kahneman described it as one of the representative heuristics people rely on when making judgments under uncertainty.
In this article, we will look in turn at the definition of the anchoring effect and its classic experiment, how it works, everyday examples, and practical ways to reduce its influence.
How the Anchoring Effect Pulls Our Judgment
Why the First Number Becomes the Benchmark
Just as a ship that has dropped anchor in a harbor cannot drift far, our judgment easily becomes “anchored” to the first number we see. This holds true even when that number is random or seems to have almost nothing to do with the question at hand.
- Anchoring Effect: a cognitive bias in which an initially presented value (the anchor) skews later estimates in its direction.
- Heuristic: a mental shortcut for making quick judgments; it is usually useful but can also produce systematic errors.
- Anchor: a number, price, or offer that serves as the starting point for comparison; later adjustments usually stop somewhere near it.
In Tversky and Kahneman’s experiment, participants watched a “wheel of fortune” spin and land on either 10 or 65, and were then asked to estimate the percentage of African countries among the member states of the United Nations. The group that saw the low number gave a median estimate of about 25%, while the group that saw the high number gave about 45%. Even paying participants for accuracy did little to reduce this gap.
Why Adjustment Falls Short and Information Leans One Way
There are two leading theories that explain why anchoring happens. One is “insufficient adjustment”: we start from the anchor and try to move toward the right answer but do not go far enough. The other is “selective accessibility”: information consistent with the anchor is what comes to mind first.
(1) Insufficient Adjustment
People take the anchor as a starting point and revise up or down from there. But they tend to stop adjusting once they reach a range that seems plausible, so the final answer still remains close to the anchor.
(2) Selective Accessibility
The moment we entertain the anchor as a tentative answer, knowledge and memories consistent with it come to mind more easily. As a result, the very material we use for judgment tilts toward the anchor.
(3) Even Experts Are Not Entirely Immune
In a classic study of real estate agents, the number written on a property’s listing price influenced their estimates of its appraised value. Even with plenty of experience, the first number often remains the reference point.
Anchoring in Price Tags, Negotiations, and Menus
The anchoring effect appears often outside the laboratory, too. It takes root especially easily in places where a “first number” is seen before anything else, such as sales, negotiations, and menu design.
Common Anchoring Scenes in Everyday Life
- List Price: displaying the “list price” in large print makes the discounted sale price feel relatively cheap.
- Opening Offer: in a negotiation, the first amount put on the table becomes the center of all later back-and-forth.
- Price Anchoring: placing a very expensive dish at the top of a menu makes the next price tier look reasonable.
- Starting Bid: both a low starting price and a high asking price become reference points that bidders look to.
Why Your Habits with Numbers Matter
Even the same amount can feel very different depending on “what you compare it with.” That is why, when setting prices, terms, or targets, it helps not simply to follow the number the other side throws out first, but to weigh it against standards you have set for yourself in advance.
How to Take a Step Back from the Anchor
Many studies suggest that the anchoring effect is hard to eliminate completely, but there are practices that reduce its influence. The key is to treat the first number not as “a hint toward the right answer” but merely as “one reference value.”
(1) Make Your Own Estimate First
Before looking at the price tag or the other side’s offer, write down what you consider a reasonable range. Once an anchor is in place, adjustment tends to fall short.
(2) Deliberately Look for Counterevidence
Forcing yourself to think of reasons why “this number is too high” or “too low” (considering the opposite) is known to help weaken selective accessibility.
(3) Line Up Several Benchmarks
Looking at different benchmarks together—market prices, cost, prices of alternatives, past results—reduces the risk of being tied to a single anchor.
(4) Be Wary Even of Extreme Numbers
Even numbers that seem absurd can pull your estimates toward them. Even if a number feels “ridiculous,” it is safer not to assume you are completely free of its pull.
The anchoring effect is a cognitive bias in which the first number or piece of information we encounter pulls later judgments toward it. Anchors are placed all around us in daily life—the list price on a discount tag, the opening offer in a negotiation, the expensive dish on a menu—so it is worth building the habit of asking once more, whenever you see a number, “Is this my benchmark, or someone else’s?”
Instead of dropping anchor at the first number right away, look first at the standards you have set and at the evidence against it—that is the first step toward sounder judgment.
