Anchoring

Summary

Anchoring is the psychological effect where the first number introduced in a negotiation sets the reference frame for everything that follows. Even people aware of the technique are not immune - the anchor still biases perceived fairness and shapes counteroffers. Going first with a bold but credible number gives you structural control over the entire negotiation.

Key Insight

• The anchor effect persists even under full awareness - knowing about it does not neutralise it
• Psychologists demonstrated the effect with entirely unrelated numbers: show someone a random figure, and their subsequent estimates drift toward it
• The practical range is constrained by credibility - too extreme loses trust, but confident boldness within a believable range moves the midpoint in your favour
• In salary negotiation: if you anchor at $60k, $65k feels generous and $55k feels low - even if the true market rate is $80k
• Going first is almost always better than waiting; whoever anchors defines the “world” inside which the other side negotiates