Cognitive Biases: Anchoring And Our Relationships With Buying Stuff

When we walk into a store and see an Ultra HD Television costing upwards of $40,000, we usually feel as if it’s a complete waste of money and start to look at the other bargain options in the $1500 range. While we may think we are smart shoppers, we have been manipulated.

Anchoring is a cognitive bias where the initial figure that is provided to our minds distorts our thinking and influences our subsequent buying decision. The $1500 TV wouldn’t look so enticing and cheap if we didn’t see the expensive one before. In fact, if the first TV we saw was for $500, then the $1500 TV would look expensive.

Everyone is using the anchoring effect. Even when we try to sell a car, we initially put a price much higher than what we plan to get from it.

The most common example is when during online and offline sales, we see that the earlier, inflated price has a big red cross over it, and the new, ...