Rational brain
Anchoring Bias: How the First Number You See Sets the Price You Pay
Crossed-out prices, sticker prices and opening offers all work the same way: they decide what “a good deal” means before you do.
Anchoring bias is the tendency to rely too heavily on the first number you see when you estimate a value, even when that number is irrelevant. In a classic experiment, people who first saw a random number from a rigged wheel of fortune gave estimates pulled toward that number (Tversky & Kahneman, 1974). Opening offers, “was” prices and list prices all work this way.
Key takeaways
- The first number in view pulls every later estimate toward it, even a random one.
- It works on experts too: real-estate agents and judges have been measured falling for it.
- It's one of the most replicated effects in psychology.
- The fix is simple: write your own number down before you see theirs.
A jacket says “was $200, now $120.” You don't know what the jacket is worth, but you know $120 is less than $200, so it feels like a deal. That feeling was decided by the first number you saw. Psychologists call it anchoring.
Anchoring bias examples from everyday life
| Where you meet it | The anchor | What it does to you |
|---|---|---|
| A sale tag: “was $199, now $99” | The crossed-out $199 | $99 feels like a bargain, whatever the item is really worth |
| A car dealer's sticker price | The price on the window | Every offer you make starts from their number, not yours |
| A salary negotiation | Whoever says a number first | The final figure lands near the first one mentioned |
| A menu with a $90 steak at the top | The $90 steak | The $40 dish below it suddenly looks reasonable |
| “Suggested tip: 20% / 25% / 30%” | The lowest button shown | 20% becomes the floor, not the ceiling |
What the research shows
Even a random number works. Amos Tversky and Daniel Kahneman spun a wheel of fortune rigged to stop at 10 or 65, then asked people what percentage of African countries were in the United Nations. People who saw 65 gave much higher estimates than people who saw 10. The wheel told them nothing, but it moved their answer anyway (Tversky & Kahneman, 1974).
It changes what you'll pay. Students wrote down the last two digits of their Social Security number, then bid on items like wine and a cordless keyboard. Those with high numbers bid far more, often two to three times more, than those with low numbers (Ariely, Loewenstein & Prelec, 2003).
Experts aren't immune. Real-estate agents toured the same house but saw different listing prices. Their own valuations moved with the listing price, yet most said the listing price hadn't influenced them (Northcraft & Neale, 1987). Experienced judges gave longer sentences after rolling dice loaded to show a higher number (Englich, Mussweiler & Strack, 2006).
It's one of psychology's most reliable effects. In the Many Labs project, a replication effort across 36 samples, anchoring replicated strongly (Klein et al., 2014).
The first offer usually wins. In negotiations, the side that makes the first offer tends to pull the final deal toward it, and focusing on your own target is what neutralizes it (Galinsky & Mussweiler, 2001).
Which brain is doing this
In Decision IQ's six-brain model, this is the rational brain taking a shortcut. It's the brain that compares and estimates, but comparing needs a starting point, and it grabs the nearest one. Then it adjusts away from that number too little.
The fix isn't to stop thinking. It's to give the rational brain its own starting point before anyone else hands it one.
How to avoid anchoring bias: the “my number first” routine
- 1
Write your number before you look. Before a negotiation, a big purchase or a quote, write down what it's worth to you and your walk-away price.
- 2
Cover the “was” price. On any sale, put your thumb over the crossed-out number and ask: “Would I pay this price if it were the only price?”
- 3
Argue against the anchor. If a number is already in your head, list three reasons it might be wrong before you adjust from it.
- 4
Make the first offer when you can. If you've done your homework, your number becomes the anchor.
Frequently asked questions
What is an example of anchoring bias?
A jacket marked “was $200, now $120” feels like a deal because of the $200, even if the jacket is only worth $80 to you. The first price you saw set what “cheap” means.
Does anchoring work even if I know about it?
Mostly, yes. In studies, people warned about anchors still showed the effect, just less. What works better is having your own number ready before you see theirs.
Should I make the first offer in a negotiation?
If you know the market and have a well-researched number, usually yes: first offers tend to anchor the final deal. If you don't know what's fair, research first rather than guessing.
What's the difference between anchoring and framing?
Anchoring is a number setting your estimate. Framing is how the same information is worded, like “90% fat-free” versus “10% fat.” Both change your decision without changing the facts.
Research notes
Sources
- 1Judgment under uncertainty: heuristics and biases Tversky & Kahneman, Science 185(4157), 1124–1131 (1974)
- 2Coherent arbitrariness Ariely, Loewenstein & Prelec, Quarterly Journal of Economics 118(1), 73–106 (2003)
- 3Experts, amateurs, and real estate Northcraft & Neale, Organizational Behavior and Human Decision Processes 39(1), 84–97 (1987)
- 4Playing dice with criminal sentences Englich, Mussweiler & Strack, Personality and Social Psychology Bulletin 32(2), 188–200 (2006)
- 5Many Labs replication project Klein et al., Social Psychology 45(3), 142–152 (2014)
- 6First offers as anchors Galinsky & Mussweiler, Journal of Personality and Social Psychology 81(4), 657–669 (2001)
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