My nine-year-old son exploited a cognitive bias to siphon extra allowance money from me. Should I commend his genius or admonish his guile?
He had no idea what he was doing, but skilled manipulators weaponize this bias to steal, cheat, and deceive.
It happens almost every day, and you never notice it. But once you’re aware of the bias and the four ways people abuse it, you’ll see it everywhere.
The Anchoring Effect
My wife and I decided to give our son an allowance — three dollars each week. We sat him down and explained the purpose of his weekly stipend. Before we got to his responsibilities, he interrupted us.
“How much? Ten dollars?”
“Ten,” I said. “That’s crazy. Five dollars”
It wasn’t until a few hours later that I realized what had happened. By introducing the $10 reference point, my son had unknowingly anchored our decision.
Even though we had $3 in mind, his mention of $10, prompted us to decide on $5. We adjusted our number to move it closer to his — The Anchoring Effect.
A cognitive bias that occurs when a person depends too heavily on the first piece of information offered during the decision-making process is known as the anchoring effect
Psychologists, Amos Tversky and Daniel Kahneman, first noted it in 1974, writing,
“People make estimates by starting from an initial value that is adjusted to yield the final answer.”
In some cases, anchors help us by offering reference points for comparison. A sign at a yard sale that reads $100 or best offer gives buyers a starting point from which to start negotiations.
But a skilled manipulator will exploit the anchoring effect to rob you of agency, leaving you naked to their machinations. They do it in subtle ways, keeping you blind to their deception.
How Manipulators Weaponize the Anchoring Effect
These four techniques represent different ways scoundrels use anchors to abuse your trust:
The irrational baseline
If I offered to sell you a pair of jeans for $150, would you buy it? What if I showed you a pair of jeans for $400 and then offered them to you for $150. Sounds more enticing, right?
The $400 price was an irrational baseline — more costly than what it should have been. You walk away happy, feeling like you scored a steal. They walk away ecstatic, knowing they fleeced you without your knowledge.
This strategy extends beyond monetary exchanges. A former boss of mine used to make us work sixty-hour workweeks. If we did a good job, he’d let us leave by 5 PM on Friday. He set such an irrational baseline that leaving on time felt like a gift.
Imagine you’ve been arguing with your husband about housework. Before you get into a discussion, he agrees to help out, but he catches you by surprise.
“Joe does two hours of housework a week,” he says. “Tim and Sam do a bit less. Fred, somehow, does almost nothing.”
You want your spouse to do seven hours, which now sounds unreasonable compared to the anchor he set. You adjust your request to four hours and agree on three.
When I was in sales, my manager taught a technique called bracketing — a way to prepare clients for higher prices. The salesperson creates two brackets of options, implying that no other choice exists.
Here’s how we would frame the question.
“Would you say your budget is in the seven to ten thousand range or ten to fourteen thousand range?”
Nine out of ten times, the prospect selects the lower bracket, thinking that he can’t go any lower. This technique often gets people to increase their maximum budget without any discussion.
High-low reference point
The most subtle of the anchoring tactics is the high-low reference point.
Imagine you’re going furniture shopping, and you’ve set a budget of $1,500. You walk into a store, and the salesperson asks you this question.
“Is your budget higher or lower than $5,400?”
The $5,000 might represent their high-end pieces, and the $400 adds specificity, making the overall number sound more plausible.
This trick allows the salesperson to set the anchor without explicitly stating it. If you’re like most people, you’ll prepare yourself to pay more than your initial budget. Even if you shoot back with $2,500, she already got you to extend your budget without any hard-selling.
How to Shield Yourself From the Anchoring Effect
Being knowledgeable can offer some resistance, but studies suggest even experts fall prey to the anchoring effect.
Throw out the first number
When you’re the first one to mention a number, you gain the anchoring advantage. Use caution. If you’re clashing with a skilled negotiator or manipulator, they’ll know what you’re doing. They won’t get mad or snide. That’s what amateurs do, and it turns people off.
The professional manipulator politely asks for permission to “educate” you. They’ll make you feel small and stupid, so you surrender to their whims. Like the old anti-drug commercial, “just say no” to their free education.
Write down your top number
You’ve heard this advice before, but do you do it? Before you go to any negotiation, put on paper the max you’re willing to offer (time, money, other resources). If the numbers move out of your favour, look at your piece of paper, and exit. Give yourself 24 hours before violating your self-imposed limit.
Make an absurd counteroffer
Remember the spouse who doesn’t do enough housework? He suggests an extra one hour per week, in line with what his buddies do, setting that as an anchor.
Instead of countering with seven hours, respond with an absurd counter offer.
“I was thinking more like fifteen hours.”
He’ll act incredulous, as expected, but it nullifies the original anchor and resets the negotiation.
Follow up with, “Now that we both got our ridiculous demands out of the way, we can start fresh.”
It works well against unscrupulous salespeople. It forces them to defend their position. And often, they cannot.
The anchoring effect is often benign, occasionally helpful, and sometimes manipulative. You can’t avoid it, but with the right strategies, you can counteract it when a manipulator weaponizes it to exploit you.