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Lesson 12 min 20 XP

Anchoring Bias

How the first number you hear distorts every estimate that follows — in negotiations, shopping, and policy.

The Power of the First Number

Anchoring is the tendency to rely too heavily on the first piece of information you encounter when making decisions. Once an 'anchor' is set, subsequent judgments are made by adjusting from that anchor — and the adjustments are almost always insufficient.

In a classic experiment, Kahneman and Tversky spun a rigged wheel that landed on either 10 or 65, then asked participants to estimate the percentage of African countries in the United Nations. Those who saw 10 on the wheel estimated about 25%. Those who saw 65 estimated about 45%. A completely random number influenced their estimates of a factual question.

Anchoring is everywhere in daily life:

  • Retail pricing: A shirt 'marked down' from $120 to $60 feels like a deal — but only because $120 is the anchor.
  • Salary negotiations: The first number mentioned becomes the anchor for the entire negotiation.
  • Legal judgments: Studies show that prosecutors' sentencing requests significantly anchor judges' decisions, even when the requests are randomly generated.