World 3 · Money psychology · Lesson 5 of 12

Anchoring: the first number wins

The first price you see bends every judgement after it — in shops, salaries and negotiations.

6 min read · Level: Practical · Free — no account needed to read

The idea

Anchoring is the tendency for the first number you encounter to pull later judgements towards it, even when that number is irrelevant. In experiments, people shown a high random number then give higher estimates of unrelated things than people shown a low one.

In money, anchors are everywhere. The “original price” next to a sale price makes the sale look better. The first figure in a salary conversation shapes where the conversation ends up. A very expensive option on a menu makes the second most expensive one seem reasonable. The asking price of a house frames every offer.

Why it matters

Anchors quietly decide how good a deal feels and how much you ask for or accept. Spotting them lets you judge prices and offers on their own terms.

A real example

The situation

At a job interview, Sofia is asked for her expected salary. She quickly names a figure close to her current pay.

What happened

Her friend, applying for a similar role, had researched typical pay first and named a higher figure. Both were offered close to what they named. Sofia’s first number had anchored the whole negotiation.

The takeaway

The first number set the range; preparation decides who sets it.

How people actually behave

Even when people know an anchor is arbitrary, they adjust away from it too little. Experts are affected too — anchors influence estimates made by experienced professionals as well as by beginners.

Common mistakes

• Judging a price by how much it has been reduced, rather than by what it is worth to you.
• Naming the first number in a negotiation without researching the range.
• Letting an expensive option make the next one down look like a bargain.

Think it through

A jacket is labelled “Was 300, now 150.” Another, identical jacket in a different shop is simply labelled 150.

Which one feels like the better deal, and why — given that they cost exactly the same?

Questions to think about

• Where have you recently let an “original price” decide that something was good value?
• What anchor might be shaping your sense of what you should earn?

Try it: Set your own anchor

1. Before your next significant purchase or negotiation, research the typical range.
2. Write down the most you would pay, or the least you would accept, before seeing any offer.
3. Compare the final result with the number you wrote.

Words in this lesson

• Anchoring — The tendency for the first number you see to pull your later judgements toward it, even when that number is irrelevant.