Why the first number you hear controls your decisions
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Quick Summary
Your brain relies too heavily on the first piece of information it receives (the "anchor"), even when that information is irrelevant or random.
What Is It?
Anchoring bias is when the first number, fact, or impression you encounter disproportionately influences your subsequent judgments and decisions. Once your brain sets an "anchor," all other information is evaluated relative to that anchor rather than independently. For example, if you see a jacket originally priced at $500 marked down to $200, you feel you are getting a great dealâeven if the jacket is only worth $100. The $500 "anchored" your perception of value.
If you had seen the jacket at $200 without the original price, you might have thought it was overpriced. The anchor was arbitrary (the store chose $500), possibly misleading (maybe it was never sold at $500), yet it powerfully shaped your judgment. Anchoring affects negotiations, purchases, estimates, valuations, and even self-perception. It is one of the most robust cognitive biases.
Real-Life Example: The Salary Negotiation
Two identical job candidates, Rahul and Priya, interview for the same position at different companies. " He says "$80,000" (his current salary plus 20%). The company was prepared to offer $100,000. They negotiate and settle at $85,000.
Rahul anchored lowâthe company adjusted down from their maximum. Priya is asked the same question. " The company was prepared to offer $100,000. They say that is higher than budgeted but negotiate to $105,000.
Priya anchored highâthe company adjusted up from their initial offer. Same role, same qualifications, $20,000 difference in outcome because of anchoring. The first number stated became the anchor around which negotiations revolved.
This is why salary negotiation advice always says: whoever mentions a number first sets the anchorâand you should anchor high if you are the candidate, or let the candidate anchor first if you are the employer.
How to Recognize It
⨠What Gets Unlocked When You Overcome This
When you recognize anchoring, you regain control over judgments. Before accepting an anchor, you ask: Where did this number come from? Is it relevant? Is it designed to manipulate me?
You deliberately generate your own anchors based on research and independent analysis before encountering external anchors. In negotiations, you anchor first (and high if you are selling, low if you are buying), or you deflect anchors ("Let us discuss value before price"). " You research market rates, comparable salaries, typical costs before entering situations where anchoring occurs. You give yourself permission to re-evaluate first impressionsâyou do not let initial data lock in your perception when new evidence emerges.
You recognize that past price, initial offer, first impression, or early estimate is just one piece of information, not the reference point around which everything revolves. Your decisions become based on actual value rather than arbitrary anchors. You spend less, earn more, judge more accurately, and think more independently because you are not pulled by whichever anchor happens to be set first.
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Understanding the Impact
Short-term
Anchoring causes immediate poor decisions: you overpay for purchases because the original price anchored high, you undervalue your work because you anchored your salary expectations low, you accept mediocre offers because the first offer anchored your expectations, you misjudge probabilities because an early estimate biased your thinking, you form snap judgments about people based on first impressions that persist despite contradictory evidence.
Long-term
Over time, anchoring creates systematic biases in how you value things: you consistently underprice your services (if you started low and that became your anchor), you accumulate expensive purchases rationalized as "deals" (anchored by inflated original prices), you stay in underpaid positions (your initial salary anchors future expectations), your self-worth becomes anchored to early feedback (harsh criticism or excessive praise in youth becomes the reference point for self-evaluation), you make investment errors (anchoring on purchase price rather than current valueârefusing to sell losing stocks because they are "below what I paid"), and you hire poorly (first candidate sets standard for evaluating all others). Anchoring particularly damages finances: marketing exploits it ruthlessly, and failure to recognize it costs money repeatedly.
The Psychology Behind It
Anchoring happens because your brain uses heuristics (mental shortcuts) to make decisions quickly with incomplete information. When evaluating something uncertain (Is this price fair? ), your brain searches for reference points. The first number becomes that reference pointâthe anchor.
Even when you try to adjust away from the anchor ("That seems too high"), adjustment is typically insufficient. Research by Tversky and Kahneman showed anchoring is remarkably powerful: even obviously random anchors influence judgments. In one study, participants spun a wheel that landed on a random number, then estimated what percentage of African nations are in the UN. Those who spun higher numbers gave higher estimatesâdespite knowing the wheel was random.
Why? Your brain activates concepts related to the anchor. Seeing "65" primes your brain to think of higher numbers, pulling your estimate upward. Seeing "10" primes lower numbers, pulling your estimate down.
This happens subconsciously and is extremely difficult to override even when you are aware of it.
At the Subconscious Level
Your subconscious treats the anchor as truth until proven otherwise. It does not evaluate whether the anchor is relevant, accurate, or manipulativeâit just uses it as a reference point because that is cognitively efficient. When you try to adjust away from an anchor, your subconscious resists because adjustment requires mental effort and uncertainty. The anchor feels safeâit is concrete, it was there first, it provides structure.
Your subconscious prefers to stay near the anchor and make small adjustments rather than start from scratch. This is why even when you consciously know an anchor is wrong, it still influences you. You might think "That original price is fake" yet still feel the sale is a good deal. Your conscious mind sees the manipulation; your subconscious still uses the anchor.
Indirect Effects
- â˘First impressions dominate your perception of people even after months of contradictory evidence
- â˘Initial project estimates become locked in, causing scope creep when reality diverges
- â˘Early relationship experiences anchor expectations for all future relationships
- â˘Childhood comparisons ("Why can not you be like your sister?") anchor self-perception for decades
- â˘Market prices anchor perceived valueâyou judge restaurant quality by price, wine taste by cost, clothing worth by brand pricing
- â˘Historical norms anchor moral judgmentsâpractices once acceptable feel wrong when social anchors shift
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