Anchoring Effect

🧠 Psychology By CampusDown Wiki Editorial Team Last updated October 16, 2026

Quick answer: The anchoring effect is a cognitive bias in which the first number or piece of information encountered acts like an anchor, pulling later judgments toward it even when it is irrelevant. It strongly affects everyday decisions such as price negotiations, discount labels and salary talks.

Contents

1. Overview
2. Key experiments
3. Anchoring in negotiation and pricing
4. Limitations and debate
5. Using it for price comparison, negotiation and interviews
6. References

Overview

The anchoring effect occurs when people start from an initial value and adjust from it, but adjust too little, so their final judgment is biased toward the starting point. It became widely known when Tversky and Kahneman (1974), in a paper in Science, presented "anchoring and adjustment" as one of the main heuristics of judgment under uncertainty.

Key experiments

Tversky and Kahneman spun a wheel of fortune rigged to stop at 10 or 65, asked participants whether the percentage of African countries in the United Nations was higher or lower than that number, and then asked for their estimate. The median estimate was 25% for the group that saw 10 and 45% for the group that saw 65. A meaningless number pulled judgments toward it.

Northcraft and Neale (1987) showed real-estate agents the same house with different listing prices; those given a higher listing price produced higher appraisals. The experts were influenced by the anchor even though they said they had not given the listing price much weight. The study shows how, for big-ticket purchases such as homes or cars, the first price seen easily becomes the starting point of judgment.

Anchoring in negotiation and pricing

First offers: Galinsky and Mussweiler (2001) reported that the first offer in a negotiation strongly influences the final settlement, which is why a well-founded first offer is recommended in salary and contract talks.
Price labels: showing a "regular price" next to a discounted one makes the original price an anchor, so the sale price feels cheap.
Investing: judging a share against the price you paid or its recent high is also explained by anchoring, which links to behavioral finance and sunk cost.

Limitations and debate

A literature review by Furnham and Boo (2011) found that anchoring has been replicated across a very wide range of tasks, but the effect can weaken when anchors are absurdly extreme or when people know the subject well. Studies also suggest that mood, motivation and personality change its size, and researchers debate whether it stems from insufficient adjustment or from selectively recalling information consistent with the anchor.

Using it for price comparison, negotiation and interviews

For a large purchase, it helps to research prices and costs from several sources beforehand and set your own reference point rather than relying on the seller's figure. In salary or contract negotiations, prepare a first offer grounded in industry data, and if the other side opens with an extreme number, bring the discussion back to your reference point rather than adjusting from theirs. Negotiation in general is covered in negotiation theory, and the influence of how the same information is presented in the framing effect.

Sources reviewed: 2026-10-16

References

Tversky, A., & Kahneman, D. (1974). Judgment under uncertainty: Heuristics and biases. Science, 185(4157), 1124–1131.
Northcraft, G. B., & Neale, M. A. (1987). Experts, amateurs, and real estate: An anchoring-and-adjustment perspective on property pricing decisions. Organizational Behavior and Human Decision Processes, 39(1), 84–97.
Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657–669.
Furnham, A., & Boo, H. C. (2011). A literature review of the anchoring effect. Journal of Socio-Economics, 40(1), 35–42.

Reports and materials that use this theory (Korean)

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