Anchoring refers to a decision-making Heuristic in which final estimates are heavily influenced by initial value estimates.
Anchoring, in the psychology context, refers to the cognitive bias where an individual relies too heavily on the first piece of information encountered (the "anchor") when making decisions or judgments. This can lead to an inaccurate or biased decision because the initial anchor may not necessarily be the most relevant or accurate piece of information.
Examples of anchoring include:
Pricing: A store advertises a product for $100 and then offers a discount of 20%. Although the product may not be worth $100, the initial anchor of $100 may lead the buyer to perceive the product as a good deal at $80.
Negotiation: A job candidate requests a salary of $70,000 during an interview. The hiring manager, who had planned to offer $60,000, is now more likely to make an offer close to the candidate's initial anchor of $70,000.
Evaluations: A student is given a high mark on their first assignment in a class. The professor then grades their subsequent assignments more harshly because of the initial anchor of the high mark on the first assignment.