Anchoring effect

The anchoring effect is a psychological phenomenon in which an individual's judgments or decisions are influenced by a reference point or "anchor" which can be completely irrelevant. The original description of the anchoring effect came from psychophysics. When judging stimuli along a continuum, it was noticed that the first and last stimuli were used to compare the other stimuli (this is also referred to as "end anchoring"). This concept was notably formalized in behavioral economics by Amos Tversky and Daniel Kahneman. In their seminal 1974 work, they described anchoring as a heuristic used to make estimates under uncertainty. Both numeric and non-numeric anchoring have been reported through research. In numeric anchoring, once the value of the anchor is set, subsequent arguments, estimates, etc. made by an individual may change from what they would have otherwise been without the anchor. For example, an individual may be more likely to purchase a car if it is placed alongside a more expensive model (the anchor). Non-numeric anchoring has been observed in physical judgments involving length, weight, and volume.