EVERYDAY PERSUASION

How we form our opinions, make our decisions, and come to believe the things we believe.

Anchoring Effect

How the value of the first item we see is used to judge the value of following items

What is the Anchoring Effect?

Imagine you’re shopping for a new washing machine. You go to the display area and the first model on show is £1,250. You’d never spend that much, of course, but the number registers. Five minutes later you find a perfectly decent machine for £450 and, without thinking, it feels almost like a bargain. You didn’t plan to spend that much. But compared with £1250 it suddenly seems reasonable.

Moments like this reveal one of the simplest yet most persistent quirks in human judgment. The very first number we encounter — whether it’s a price tag, a suggested tip, a salary range or even a throwaway estimate — quietly becomes our reference point. Psychologists call this the anchor: the starting value our minds cling to when making sense of everything that follows. Even when we know it’s arbitrary, even when we tell ourselves we’re being rational, the anchor still pulls.

Psychological Anchoring Definition

Anchoring is a cognitive bias in which the first piece of information we receive — often a number — becomes the mental starting point for all later judgments. Once an anchor is set, we tend to adjust away from it only slightly, even when the anchor is arbitrary, irrelevant or clearly unrealistic.

In practice, this means our sense of what is “normal”, “reasonable” or “fair” is often shaped less by logic and more by how it compares to whatever figure happened to appear first.

When on-line services show you a “Premium” plan first — the one with extra features you’ll never use — it isn’t to sell it. It’s to make the mid-tier plan look perfectly reasonable. The displayed anchor is doing the persuasion.

When Apple introduced the iPhone X at £999, people gasped at the price. But a year later, when the iPhone XS arrived at £1,149, the original £999 suddenly looked almost restrained. The anchor had shifted. Consumers hadn’t become more extravagant; the benchmark simply moved.

Petrol prices offer a textbook example of anchoring. When companies raise the price per gallon sharply, public anger is guaranteed — but so is a new anchor. A week later, when they reduce the new price slightly, customers feel a sense of victory, even though the “reduced” price is still much higher than before. The spike wasn’t a mistake; it reset what counts as normal.

How Anchoring Works

Anchoring works because our minds prefer shortcuts. When faced with uncertainty — a price we don’t often pay, a number we’ve never considered, a decision with no obvious benchmark — we instinctively latch onto the first value available. That initial figure becomes a reference point, and our later adjustments tend to be modest, even when the anchor deserves to be ignored entirely.

Psychologists describe two processes at play. First, anchors shape how we interpret new information: a £119 coffee machine feels cheap or expensive depending on the anchor set moments earlier. Second, anchors influence how we search for information, nudging us toward details that support the initial figure. Once an anchor is in place, our minds work to make it feel reasonable.

This makes anchoring remarkably persistent. High anchors inflate our estimates and expectations; low anchors deflate them. And because anchors operate quickly and quietly, we rarely notice how much they’ve guided our thinking until the decision is already made.

The author of the article Emma McCulloch Profile Picture
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The articles found in the pages of this hub can be seen as background information for the themes which run throughout our books

Key People

Amos Tversky and Daniel Kahneman

Anchoring enters the modern persuasion and behavioural-science canon through the work of Tversky and Kahneman. In the 1970s, they demonstrated that people rely heavily on the first number they encounter when making estimates, even when that number is random or absurd. Their research showed that anchoring is not a quirk of shopping behaviour but a general feature of human judgement.

Dan Ariely

Ariely’s popular behavioural-economics studies helped bring anchoring into mainstream awareness. His experiments showed how arbitrary numbers — even digits from a participant’s National Insurance number — can influence how much people are willing to pay for products.

Richard Thaler

Thaler extended anchoring into the world of consumer behaviour and public policy. His work on “mental accounting” reveals how anchors shape what feels like a good deal, a fair salary or a reasonable fine, influencing everything from retail pricing to government nudges.

These researchers helped establish anchoring as a core idea in behavioural science: simple, predictable, and deeply woven into everyday decision-making.

Key Research

The Wheel-of-Fortune Experiment (Tversky & Kahneman, 1974)

In the landmark study that introduced anchoring, participants were asked to spin a wheel rigged to land on either 10 or 65. They were then asked whether the percentage of African nations in the United Nations was higher or lower than that number, and finally to estimate the true figure. Despite the wheel being entirely random, those who saw 10 gave far lower estimates than those who saw 65. A meaningless number had quietly shaped a supposedly rational judgment.

Arbitrary Coherence (Ariely, Loewenstein & Prelec, 2003)

In a now-famous experiment, participants wrote down the last two digits of their National Insurance number before bidding on various products. Incredibly, those with higher numbers consistently bid more — sometimes dramatically more. The study suggested that anchors don’t need to be plausible or relevant; even an unrelated number can create a sense of “reasonable” value.

Retail Pricing and the Power of ‘Was / Now’ Labels

Field studies in supermarkets and online shops show that “Was £199 / Now £79” framing increases sales not simply because the price drops, but because the anchor (the higher, crossed-out price) makes the new price feel significantly lower. Importantly, consumers rely on the displayed anchor even when they suspect the discount is exaggerated.

Anchoring in Salary Negotiations

Research repeatedly demonstrates that the person who names the first number in a negotiation — whether it’s a salary, a freelance fee or a house price — gains a measurable advantage. High initial anchors pull counter-offers upwards; low anchors drag them down. Even experienced negotiators aren’t immune.

Everyday Example

An overhead shot of a group of friends booking a hotel on-line and being swayed by a concept known as psychological anchoring

Think about the last time you booked a hotel online. You may have started with an innocent search for “somewhere affordable,” only to be confronted with a grid of glossy rooms ranging from £89 to £429 a night. You had no idea what a fair price was for that city, that weekend or that part of town — so the site did the work for you. The £429 suite became your silent anchor, making the £189 option feel reasonable and the £129 room feel like a steal.

You didn’t check the market rate. You didn’t compare dozens of listings. You simply judged each price against the first one you saw. And, like most of us, you walked away believing you’d made a sensible, independent decision — not one gently steered by a number that was never meant for you to choose.

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