Anchoring Effect
Relying too heavily on the very first piece of information offered (the 'anchor') when making decisions.
THE TRAP TEST
1 / 5A store has a shirt marked down from $200 to $50. You...
👇 Choose one option:
The Starting Line Bias
When making an estimate, your brain needs a starting point. It will latch onto literally any number it sees first—even completely random ones. Once the anchor is set, all subsequent adjustments are made relative to that anchor, and the adjustments are almost always insufficient.
The Steve Jobs iPad Reveal
When Steve Jobs revealed the first iPad, he put a giant '$999' on the screen. He let the audience absorb it. Then he said, 'We're not pricing it at $999. We're pricing it at $499.' The crowd went wild. $499 was still expensive for a tablet, but compared to the $999 anchor, it felt like a massive bargain.
How to Defend Yourself
Drop the First Anchor
In negotiations, always be the first to state a number. It gives you control of the anchor.
Research Base Rates
Never enter a negotiation or purchase without knowing the objective market value beforehand.
Evaluate in Isolation
Cover up the 'original price' on a sale item. Ask: 'Would I pay the current price for this item right now?'