Anchoring
What is anchoring?
Anchoring, also called the anchoring effect, is a cognitive bias in which people rely heavily on the first piece of information they receive (the "anchor") when making decisions. This initial information then influences all subsequent judgments and choices, even if that information is irrelevant or misleading.
How does anchoring work?
The effect works because the initial number or impression sticks in our memory and forms our judgment. We then adjust our thinking based on this anchor, even when newer or conflicting information is available.
An example of anchoring
For example, if you see a sweater in a store for €100, but later see the same sweater discounted for €50, the discounted sweater seems like a good deal because you used the original amount as a reference. This is anchoring in action, where the original price acts as an anchor and influences your perception of the value of the sweater.
And another example. Suppose a company offers three subscription options: €10, €30, and €50 per month. The most expensive option acts as an anchor, making the €30 option seem reasonable even if it is pricier than what the consumer originally wanted to spend. Using the €50 subscription as a reference, the middle price seems more attractive.
