What is it?
Anchoring is a bias that makes people rely too heavily on the first piece of information they receive when making a decision.
Anchoring is a cognitive bias where people tend to rely too heavily on the first piece of information they receive (the "anchor") when making decisions or forming opinions. This initial information serves as a reference point, and subsequent information is often evaluated in relation to it, even if the anchor is irrelevant or unrelated to the decision at hand.
Here are two simple examples to help you understand anchoring:
Shopping example: Imagine you're shopping for a new shirt. The first store you visit has a shirt you like for $50. You think it's a bit pricey but decide to keep looking. In the next store, you find a similar shirt for $40. Even though $40 might still be more than you originally wanted to spend, you feel like you're getting a good deal because it's cheaper than the first shirt you saw. The initial price of $50 serves as an anchor, influencing your perception of the $40 shirt's value.
Salary negotiation example: When negotiating a salary for a new job, the employer may offer you an initial salary of $60,000 per year. This figure becomes your anchor, and you might counter with a request for $65,000 per year. If the employer had initially offered you ...