Definition: Our tendency to allow a number or other piece of data to serve as a starting point to determine another number.
Example: Studies have shown that the first asked price, or even an irrelevant number mentioned in a conversation like a social security number, can influence the final number in a decision.
Why It’s Important: Anchoring shows that numbers mentioned at the beginning of a negotiation have much a very powerful influence on the outcome. You can use anchoring to your benefit when negotiating. Understanding the power of anchoring can help you avoid its detrimental effects.