What is Anchoring (Anchor)?
Anchoring is a cognitive bias in which an initial piece of information — the anchor — disproportionately influences subsequent judgments and estimates. When a real-estate agent mentions that a neighboring house sold for $800,000 before showing a listing priced at $650,000, the higher number makes the asking price feel like a bargain, regardless of the home’s objective value. The anchor need not be relevant or even logically related to the judgment at hand; its mere presence shifts the range within which people reason.
How it works
Amos Tversky and Daniel Kahneman identified anchoring in their landmark 1974 paper on judgmental heuristics. In one experiment, participants spun a rigged wheel that landed on either 10 or 65, then estimated the percentage of African nations in the United Nations. Those who saw the higher number gave estimates that were dramatically higher than those who saw the lower number, despite the wheel being obviously random. The prevailing explanation is insufficient adjustment: people start from the anchor and adjust outward, but they stop adjusting too soon, leaving their final estimate biased toward the starting point.
Applied example
Menu designers in the restaurant industry routinely place a high-priced item — such as a $59 seafood tower — at the top of the menu. The expensive dish serves as an anchor, making a $26 entrée feel reasonably priced by comparison. Research on restaurant revenue has found that the presence of a single premium anchor item can shift average order value upward, not because customers buy the anchor itself, but because it recalibrates their sense of what constitutes a normal price on that menu.
Why it matters
Anchoring has direct applications in pricing strategy, negotiation, and interface design. The first number a user encounters — a default donation amount, a suggested tip percentage, a subscription tier — sets the frame for every number that follows. Understanding anchoring allows designers to set starting points intentionally and helps decision-makers recognize when an irrelevant number is distorting their judgment.
