This bias leads us to overemphasize the first information we receive, which then shapes our subsequent judgments and decisions.
An example of anchoring bias can be seen in negotiations over a car’s price. If a car seller starts with a high price, even if it’s substantially above the vehicle’s actual value, this sets an “anchor” in the buyer’s mind. Consequently, the buyer may feel like they’re getting a good deal if they manage to negotiate the price down by a few thousand dollars, despite still paying more than the car’s actual worth.
To better understand anchoring bias and its implications, a key literature reference is the influential paper by Amos Tversky and Daniel Kahneman, “Judgment under Uncertainty: Heuristics and Biases” (1974). In their pioneering work, Tversky and Kahneman elaborate on anchoring bias as part of a range of cognitive biases affecting human decision-making. By being aware of these biases, we can take steps to minimize their impact and make more informed and rational choices.