A shirt tagged ₹2,999, marked down to ₹1,499, feels like a steal. The same shirt priced at ₹1,499 from the start feels completely normal. Same shirt. Same price. The only thing that changed was the first number your brain saw.
Summary
Anchoring bias is the tendency to rely too heavily on the first number we see when making a judgement. Amos Tversky and Daniel Kahneman described it in 1974. In marketing, price anchoring shows up as original prices next to sale prices, expensive options shown first, and rival prices shown next to your own. The first number sets the reference point for everything after it.
Internet Culture · Glossary · 005
Also known as: anchoring effect, price anchoring
Related to: decoy effect, loss aversion, reference price
1 Anchoring bias in plain words
You walk into a phone store. The first phone the salesperson shows you costs ₹1,20,000. You gasp. Then they show you one for ₹70,000. Suddenly ₹70,000 feels reasonable.
If they’d shown you the ₹70,000 phone first, it would have felt expensive.
That’s anchoring bias. The first number becomes a mental starting point. Every number after it gets judged against that point, not on its own.
2 Where does anchoring bias come from?
Tversky and Kahneman, 1974. In a famous paper in Science called “Judgment under Uncertainty“, psychologists Amos Tversky and Daniel Kahneman showed how people use mental shortcuts. In one experiment, people spun a wheel that landed on a random number. They were then asked to estimate the share of African countries in the United Nations. People who saw a higher number on the wheel gave higher estimates. A completely random number changed their answers.
Ariely, Loewenstein and Prelec, 2003. In a study often described with the phrase “coherent arbitrariness“, researchers asked students to write down the last two digits of their social security number. Then they asked how much they’d pay for items like wine and keyboards. Students with higher digits were willing to pay noticeably more. An irrelevant number shaped what people thought things were worth.
A fair note. Some well-known anchoring findings have been debated in replication studies, and the size of the effect varies. But the basic idea, that first numbers influence later judgements, holds up across many studies and real-world pricing.
3 Why does the anchoring effect work?
People rarely know what things are “really” worth. What should a serum cost? A software plan? A meal? Most people have no fixed answer. So they grab the nearest number and use it as a guide.
We adjust, but not enough. People start from the anchor and move away from it. They usually stop too early, so the final judgement stays close to the anchor.
The anchor makes some thoughts easier. A high anchor makes people think of reasons something might be worth a lot. Those reasons then shape the final decision.
THE FIRST NUMBER RULE
Whatever number a customer sees first becomes the ruler they measure everything else against. Decide that number on purpose.
Rule 1. Order matters. Show the premium option first if you want the middle option to feel reasonable.
Rule 2. Anchors must be real. A real original price, a real rival price, a real premium plan. Fake anchors are dark patterns.
Rule 3. No anchor is still an anchor. If you don’t give customers a reference, they’ll bring their own, usually the cheapest price they’ve ever seen.
4 6 anchoring bias examples you see every week
01. Strike-through prices. “₹2,999 ₹1,499″. The crossed-out number is the anchor. Myntra, Ajio and Amazon use it on almost every sale page.
02. Showing the expensive plan first. Many pricing pages list plans from most expensive to least. The top price makes the others feel smaller.
03. Rival price comparisons. Apps like Toing show another platform’s price next to their own. The rival’s higher price becomes the anchor.
04. “Worth ₹5,000, yours for ₹999”. Courses and bundles use a stated value as the anchor, even when that value is hard to check.
05. Restaurant menus. A very expensive dish at the top makes the next one down look sensible. It often exists mainly to make the others look cheaper.
06. Salary negotiations. The first number mentioned often shapes the final offer. This is why negotiation advice often says it can help to make the first, well-researched offer.
5 The costly mistake: fake anchors
The biggest mistake with price anchoring is inventing the anchor.
An “original price” the product was never really sold at. A “worth ₹10,000” claim nobody can back up. A permanent “70% off” that never ends.
It works for a little while. Then customers notice the sale never stops, or they spot the same product cheaper elsewhere. After that, every price you show looks fake.
It can also get you into trouble. India’s Central Consumer Protection Authority covers misleading pricing practices in its 2023 dark patterns guidelines, and misleading price claims can also fall under consumer protection law. Real anchors are smart marketing. Fake ones are a liability.
One more mistake: anchoring too high. If the anchor is unbelievable, people don’t adjust from it. They just stop trusting you. A ₹500 product “worth ₹50,000” triggers suspicion, not desire.
6 How to use anchoring bias on Monday
- Check what number customers see first on your pricing or product page.
- If you have plans, test showing the premium one first.
- If you run a sale, make sure the original price is genuine and recent.
- If you’re cheaper than rivals, consider showing a fair comparison with fees included.
- If you’re more expensive, anchor on something else: cost per use, cost per day, or what the problem costs without you.
- Remove any anchor you couldn’t defend to an angry customer.
7 Frequently asked questions
What is anchoring bias in simple terms?
Anchoring bias is when the first number you see influences how you judge everything after it. A ₹70,000 phone feels cheaper if you saw a ₹1,20,000 phone first.
Who discovered anchoring bias?
Amos Tversky and Daniel Kahneman described anchoring bias in their 1974 paper “Judgment under Uncertainty”, published in Science. Later studies, including work by Dan Ariely and colleagues, showed it also affects how much people are willing to pay.
What is price anchoring in marketing?
Price anchoring is using a reference price, such as an original price, a premium plan or a rival’s price, to shape how customers judge your price. It makes a price feel like a better deal by comparison.
What are some anchoring bias examples?
Common anchoring bias examples include strike-through sale prices, expensive plans listed first on pricing pages, rival price comparisons, “worth ₹X” bundle claims, expensive dishes at the top of menus, and the first offer in a salary negotiation.
Is price anchoring ethical?
It is ethical when the anchor is real, such as a genuine original price or an accurate competitor price. It becomes misleading when the anchor is invented, such as fake original prices or unrealistic “worth” claims.
Related terms
Decoy Effect · Loss Aversion · Reference Price · Goal Gradient Effect · Contribution Margin
