Question . . .
The price of this car is $30,000.
Is that a good deal?
Different Question . . .
The retail price of this (same) car is $35,000. I’ll sell it to you for $30,000.
Is that a good deal?
Different Question . . .
This (same) car retails for $29,000 but has been selling for $4,000 over. I’ll sell it to you for $30,000.
Is that a good deal?
It’s the same car, so what’s different?
The key is the first piece of information. That’s called the anchor. It primes our thinking in ways we often don’t see.
$30,000 is $30,000, but our sense of value is set by the anchor.
In this case, the anchor is coming from someone else. It’s external. You may think you know the car market and have your own set of beliefs, reference points, and context that will anchor your assessment. Those are internal.
It’s pretty much over once the anchor is set. It is the rare person who can avoid judging things in relationship to that reference point. Even if it has little or nothing to do with the decision you’re trying to make.
If you’re trying to influence someone else, job one is to set the anchor.
If you’re trying to make a “better” decision, beware the anchors.