Imagine walking into a store and seeing a jacket marked down from $300 to $150. Suddenly, $150 feels like an amazing deal.
But what if the jacket was never really worth $300?
That first number may still influence how you judge the second one. Instead of asking, “Is this jacket worth $150?” your brain may automatically compare $150 with the original $300 price.
This is a classic example of anchoring bias, a cognitive tendency in which an initial number, value, or piece of information influences later judgments.
Researchers Amos Tversky and Daniel Kahneman helped bring widespread attention to anchoring through their influential research on judgment under uncertainty.
Later research has shown that anchoring can affect many different kinds of estimates and decisions.
Understanding why anchoring bias can affect decisions more than you realize can help you make smarter choices about prices, negotiations, estimates, and everyday problems.
What Is Anchoring Bias?
Anchoring bias occurs when an initial piece of information becomes a reference point for later judgment.
Once an anchor is established, people often adjust away from it – but not enough.
Imagine someone asks whether the population of a city is greater or smaller than five million people. Even if five million was chosen almost randomly, that number may influence your later estimate.
Your brain now has a starting point.
Tversky and Kahneman famously demonstrated this effect using a wheel that generated numbers before participants estimated the percentage of African countries represented in the United Nations.
Even though participants knew the numbers were randomly produced, their estimates were influenced by them.
That is what makes anchoring particularly interesting. The anchor does not always need to be meaningful or accurate to affect judgment.
The First Number Can Change How a Price Feels
Shopping provides some of the easiest examples of anchoring.
Imagine two stores selling the same headphones for $120.
At Store A, you simply see:
Price: $120
At Store B, you see:
Regular price: $220 – Now $120
The final cost is identical, but the second offer may feel much more attractive because $220 provides an anchor.
Instead of judging $120 independently, you start comparing it with the higher reference price.
This does not mean every discount is misleading. Sometimes the original price is completely legitimate.
The important point is that the first number can shape your perception of value before you perform a proper comparision.
A useful shopping habit is to ignore the stated discount for a moment and ask: “If I had never seen the original price, would I still think this product was worth the current price?”
That simple question helps separate actual value from the anchor.
Anchoring Can Strongly Influence Negotiations
Negotiations are another environment where anchors matter.
Imagine you are buying a used car and believe it is worth around $15,000. Before you make an offer, the seller says they want $22,000.
Even if you immediately think that price is too high, your counteroffer may still move closer to $22,000 than it otherwise would.
Research by Adam Galinsky and Thomas Mussweiler found that first offers could act as powerful anchors in negotiations.
Across three experiments, the person making the first offer tended to achieve a more favorable outcome, and initial offers strongly predicted eventual settlement prices.
However, making the first offer is not automatically beneficial in every situation. Later research has found that first offers can also reveal information about a negotiator’s priorities, potentially creating disadvantages under some conditions.
Preparation Reduces the Power of the Anchor
One practical defense is deciding what something is worth before hearing the other person’s number.
Research the market price. Decide your target and your maximum acceptable amount.
An independant reference point gives your judgment somewhere else to begin.
Without one, the other person’s number may quietly define the entire negotiation.
Anchoring Influences More Than Money
Anchoring is not limited to shopping and negotiation.
It can affect estimates of distance, probability, performance, quantities, and many other judgments.
Suppose your colleague says:
“I think this project will require about 200 hours.”
Even if you originally had no estimate, 200 now becomes difficult to ignore.
You may analyze the project carefully and eventually estimate 170 hours. But would you have reached 170 if your colleague had first suggested 80?
Possibly not.
A broad research review described anchoring as one of the more robust findings in research on judgment, appearing across numerous tasks and decision-making settings.
Anchoring effects can also persist. Research has found evidence that anchors may continue influencing judgments even after considerable time has passed.
That makes the phenomenon more than a momentary psychological curiosity.
Even Unrealistic Anchors Can Influence Judgment
You might assume an obviously ridiculous number would be easy to ignore.
Surprisingly, research suggests that anchors do not always need to be realistic.
Experimental studies have shown that people’s numerical judgments can shift even after exposure to extreme or implausible anchors. Researchers studying anchoring have reported effects using values that participants clearly recognized as unrealistic.
Why?
One explanation is that comparing something with an anchor activates information consistent with that reference point.
If someone asks whether a famous building is taller or shorter than 500 meters, for example, your mind begins considering characteristics associated with very tall buildings.
Even after rejecting 500 meters as too high, the comparison can influence your later estimate.
Researchers have proposed several explanations for anchoring, including insufficient adjustment and selective accessibility of anchor-consistent information.
The precise mechanism can vary, but the practical lesson is straightforward: recognizing that a number is arbitrary does not necessarily make you immune to it.
Expertise Does Not Always Make Anchoring Disappear
It is tempting to think anchoring only affects people who lack experience.
Experts certainly have advantages. They often possess stronger reference points, more domain knowledge, and better information for evaluating estimates.
But expertise does not automatically eliminate cognitive bias.
Research on professional judgment has found that experts can still be vulnerable to cognitive biases under certain circumstances.
Anchoring has also been studied in consequential professional contexts, including legal decision-making. APA materials describe research examining how initial charges and other starting values may become reference points during plea negotiations.
The lesson is not that expertise is useless. It is that expertise and bias can coexist.
Someone may know a great deal about a subject and still be influenced by how a question or numerical starting point is presented.
How to Reduce Anchoring Bias in Everyday Decisions
Completely eliminating anchoring may be unrealistic, but you can reduce its influence.
One of the best strategies is developing your own estimate before seeing someone else’s.
If you are buying a house, research similar properties before focusing on the asking price. If you are negotiating salary, investigate the market range before hearing the employer’s offer.
When making forecasts, ask several people for estimates seperately before everyone discusses their numbers together. This reduces the chance that the first confident estimate becomes the reference point for the entire group.
Another technique is deliberately considering evidence that conflicts with the anchor.
Research on negotiation has found that focusing on information inconsistent with the opponent’s first offer can reduce or even eliminate its anchoring advantage.
You can also ask yourself:
“What would I think if the first number had been completely different?”
That question encourages mental ajustment away from the original reference point.
Finally, compare several independent sources. One price, estimate, forecast, or opinion should rarely define the entire decision when better information is available.
Why Awareness of Anchoring Matters
Anchoring is powerful partly because it often feels invisible.
You do not usually think, “That number has altered my judgment.” You simply feel that your final estimate makes sense.
That is why awareness matters.
A salesperson’s original price, a colleague’s forecast, an opening salary offer, or even a random number can sometimes influence what feels reasonable afterward.
Anchoring belongs to the broader family of heuristics and cognitive biases studied in behavioral economics and psychology. These mental shortcuts can make decision-making faster, but they can also produce systematic errors.
Learning about them does not mean distrusting every instinct.
It simply gives you another reason to slow down when the decision matters.
Anchoring bias shows how easily an initial number or reference point can influence what seems reasonable later.
It can affect how you judge discounts, estimate quantities, negotiate prices, evaluate offers, and make important financial or professional decisions. Even arbitrary or unrealistic anchors may sometimes shift judgment.
The best defense is not trying to ignore every anchor. Instead, create stronger reference points of your own through research, independent estimates, comparisons, and alternative perspectives.
The next time you see an original price, hear an opening offer, or receive someone’s estimate, ask yourself one question: “Would I reach the same conclusion if I had never seen that first number?”
That habit can make everyday decisions much more deliberate.