The Psychology of Everyday Life: Motivation and the Search For Happiness

The Psychology of Money

What is the anchoring effect?

The anchoring effect refers to the way an irrelevant stimulus can have a strong effect on further decisions. For example, Dan Ariely and colleagues held an auction for a range of items. Before people were allowed to bid in the auction, they were asked to write down the last two digits of their social security number. Although the social security number had no logical relationship to the auction, people who wrote down higher numbers bid an average of three times more money for the same items than people who wrote down low numbers.


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