Anchoring heuristic

The anchoring heuristic is a cognitive bias in which people rely too heavily on the first piece of information they receive when making subsequent judgments. The initial value — the "anchor" — serves as a reference point that pulls estimates toward it, even when the anchor is arbitrary or irrelevant. In a classic demonstration, subjects who are shown a random number generated by a wheel of fortune subsequently adjust their estimates of the proportion of African countries in the UN insufficiently from that anchor, producing estimates that correlate with the random number.

The anchoring heuristic reveals that numerical judgments are not generated from scratch but are adjustments from a starting point. The adjustment is typically insufficient: people move from the anchor in the right direction but not far enough. This insufficiency is not laziness but a property of the cognitive architecture: the mind generates estimates by iterative adjustment, and the process terminates before reaching the true value because the cost of further adjustment exceeds the perceived benefit.

The heuristic has profound implications for negotiation, pricing, legal damages, and policy design. The first number mentioned in a negotiation shapes the final agreement. The sticker price on a product shapes the consumer's willingness to pay. The initial demand in a lawsuit shapes the settlement. Anchoring is not a quirk of individual judgment; it is a structural feature of how the mind constructs estimates from reference points. See also: Cognitive bias, Availability heuristic, Heuristics and biases, Bounded rationality, Decision-making