What is it?
We tend to rely heavily on one trait or the first piece of information (the “anchor”) that we are offered, and use it as a reference and benchmark for other decisions from that point on.
How can I use it in my favour?
In an experiment, 2 groups of people were asked to estimate the population of a city in Australia. Before estimating, one group was asked whether they thought the population was greater or less than 50,000, while a second group was asked if it was greater or less than 10,000,000. The second group gave a higher estimate because they anchored their decision on the previous information.
An online store offering a $399 coat that has been marked down to $99 gets the customer anchored on the higher price and creates the idea that an expensive, and therefore more desirable, coat is now a great buy.