PSYCHOLOGY
psychology
negotiation
bias
money
Anchoring Bias: The First Number Wins
The first number mentioned in a negotiation acts as an anchor. Just hearing a high number makes all subsequent numbers seem smaller.
Tversky & Kahneman• 5 min read
The Gandhi Experiment
Group A was asked: "Did Gandhi die before or after age 9?" Group B was asked: "Did Gandhi die before or after age 140?" Then both were asked to guess his age of death. Group A guessed significantly lower than Group B. The irrelevant numbers (9 and 140) acted as anchors.
Negotiation Tactics
Always state your price first. If you are selling, set a high anchor. If you are buying, set a low anchor. Even if the other person knows what you are doing, their brain cannot ignore the anchor. It pulls the final price in its direction.