Anchoring bias.
In plain English
Anchoring bias is the tendency to lean on the first piece of information, the anchor, when making a judgment, so later estimates get pulled toward it. Tversky and Kahneman documented it in 1974: even an obviously arbitrary starting number shifted people's answers in its direction. With money it shows up everywhere prices are set, a slashed-from price that makes a sale look better, a first offer that frames a negotiation, an original sticker that makes a markdown feel like a deal. The anchor does its work whether or not it has any real bearing on value.
01Why it matters
Sellers and negotiators set anchors on purpose, so recognizing anchoring bias helps you judge a price or offer on its own merits instead of relative to whatever number was put in front of you first.
02The math, step by step
A jacket tagged as marked down from 200 dollars to 80 feels like a bargain, because the 200 anchors your sense of its worth, even if similar jackets sell for 60. The first number shapes the judgment, regardless of whether it reflects real value.
03What this is NOT
It is not the same as comparing prices. Real research checks a price against independent information. Anchoring is letting one arbitrary number, often supplied by the seller, set your reference point without any outside check.
04Receipts
Every figure on this page is sourced to a primary document. Tap to open the original.