The Anchoring Effect: Why the First Number Sticks

By Iris Penhaligon · Published Oct 20, 2026 · 6 min read

In this guide

How anchoring works
Anchors in shopping
Anchors in negotiation
Protecting yourself
Anchors are not always bad

Show people a high number, then ask them to estimate something unrelated, and their estimates tend to be higher. This is anchoring, one of the most robust findings in behavioural economics.

Anchors are everywhere once you start looking — and businesses use them deliberately.

How anchoring works

When we are uncertain about a value, we start from a reference point and adjust — usually not enough. The first number we encounter often becomes that reference point, even when it is irrelevant.

Anchors in shopping

A “was” price next to a sale price, a very expensive item displayed first on a menu, or a premium product tier that few people buy all make other options look like good value by comparison.

Anchors in negotiation

In salary and price negotiations, the first offer often shapes the final outcome. Research suggests that making a well-researched first offer can be advantageous.

Protecting yourself

Research prices independently before you see the seller’s number
Decide your own budget or target in advance
Ask “what would I pay if I had never seen that price?”
Compare total cost rather than discounts

Anchors are not always bad

Reference points help us make quick decisions in a complex world. The problem arises when anchors are set by people with an interest in our choice.

This is general educational information about economics, not financial, investment, or tax advice. Consult a qualified, licensed professional before making financial decisions.

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