Persuasion & consumer psychology · law 056
Anchoring Bias
Also known as: Anchoring effect
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
what it means
The first number people see heavily influences their later judgements, even if that number is irrelevant.
How Anchoring Bias works
The first figure in a negotiation, price list, or estimate becomes a mental reference point. Later numbers are judged relative to it, not on their own merits.
This is why opening offers matter, why original prices appear next to sale prices, and why premium options are shown first.
where it comes from
Demonstrated by Amos Tversky and Daniel Kahneman in 1974: people who saw a random number from a spun wheel gave estimates of the share of African countries in the UN that were pulled toward that number.
Anchoring Bias examples in business
Negotiation
The first salary figure mentioned tends to shape the final offer.
Retail
A ‘₹4,999 → ₹2,999’ tag makes the sale price feel like a bargain.
Pricing pages
Showing the enterprise plan first makes mid-tier plans feel reasonable.
How to apply it
- 1In negotiations, make the first credible offer when you can.
- 2Show your premium option before your standard one.
- 3Use honest reference prices to frame value.
- 4When you are the buyer, set your own anchor before hearing theirs.
common misreading
Inflated or fake ‘original’ prices can mislead customers and break consumer law. Anchors must be honest.
ask yourself
What is the first number your customer sees, and is it working for you?
put it into practice
Frequently asked questions
What is Anchoring Bias?
The first number people see heavily influences their later judgements, even if that number is irrelevant. The first figure in a negotiation, price list, or estimate becomes a mental reference point. Later numbers are judged relative to it, not on their own merits.
Who came up with Anchoring Bias?
Demonstrated by Amos Tversky and Daniel Kahneman in 1974: people who saw a random number from a spun wheel gave estimates of the share of African countries in the UN that were pulled toward that number.
How do you apply Anchoring Bias in business?
1. In negotiations, make the first credible offer when you can. 2. Show your premium option before your standard one. 3. Use honest reference prices to frame value. 4. When you are the buyer, set your own anchor before hearing theirs.
What is a common misunderstanding of Anchoring Bias?
Inflated or fake ‘original’ prices can mislead customers and break consumer law. Anchors must be honest.