Tuesday, November 27, 2012

Examples of the Anchoring Effect

Are you thinking about buying a new car?  What about a house?  The salesperson is, no doubt, trained in using the anchoring effect to bring your expectation of the price up to their sales goal.

In a negotiation, the anchoring effect works by making sure your "opponent" has a higher or lower number in mind than what you really expect them to agree to.

The application to sales is pretty easy to see.  The case that surprised me was jail sentences.  Research has shown (see previous blog for references) that judges award longer sentences when the prosecuting attorneys ask for them.  This is being attributed to the anchoring effect.

I have wondered why students that harangue instructors win arguments for better grades.  Maybe the anchoring effect makes a difference in those discussions that go something like, "I deserve a 98, but you gave me a 90."

Now that you are aware of the anchoring effect, watch for it.  You may be surprised at the many places it appears.  However, be warned that even after receiving instruction on the anchoring effect, test subjects were still affected by it!

Happy negotiating!

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