You walk into a salary negotiation. Your future boss asks what you're looking for. You say $80,000. She counters with $75,000. You settle on $77,500. Now imagine you'd said $95,000 instead. The final number would likely have been thousands higher—even if both of you knew the market rate all along.

This isn't magic. It's the anchoring effect, and it's reshaping every negotiation you'll ever have.

The Number That Changes Everything

In 1974, psychologists Amos Tversky and Daniel Kahneman asked people to spin a wheel that randomly landed on numbers between 0 and 100. Then they asked participants to estimate the percentage of African nations in the United Nations. The wheel was completely random, yet people who saw higher numbers gave higher estimates. A meaningless number influenced their judgment.

The anchoring effect works like this: the first number mentioned becomes a reference point. Everything else gets measured against it. Your brain starts there and adjusts—but never adjusts enough.

In negotiations, this bias is turbocharged. When someone makes the first offer, they're not just suggesting a price. They're planting a flag that pulls the entire conversation toward them.

Researchers Dan Orr and Chris Guthrie analyzed multiple studies and found that initial offers correlate with final outcomes at .497—nearly a 50% connection. In some experiments, that correlation jumped to .85. The first number doesn't just matter. It dominates.

Why Going First Usually Wins

Here's what decades of research tell us: whoever makes the first offer typically walks away with a better deal.

Thomas Galinsky and Thomas Mussweiler ran experiments where participants negotiated the sale of a chemical plant. When sellers made the first offer, they got higher prices. When buyers went first with a low number, they paid less. The role didn't matter. The timing did.

This holds true whether you're negotiating face-to-face or over email. Whether you're buying or selling. Whether the stakes are high or low.

The anchoring effect creates a gravitational pull. Once that first number exists, both parties interpret all subsequent information through its lens. A seller who hears a low first offer starts thinking about why the item might be worth less. A buyer who hears a high number starts justifying why it might be worth more.

Your brain doesn't evaluate the offer objectively. It uses the anchor as a starting point and makes adjustments from there. The problem? Those adjustments are almost always insufficient.

The Precision Advantage

Not all anchors are created equal. A $5,000 offer works differently than a $5,115 offer.

Researchers Malia Mason, Alice Lee, Elizabeth Wiley, and Daniel Ames discovered something surprising: precise numbers anchor more strongly than round ones. In their studies, people who received precise first offers made smaller counteroffers.

They examined real-world data from 1,511 homes on Zillow. In the $10,000-$99,999 range, 73% of listings ended with at least three zeros. Between $100,000 and $999,999, it was 71%. For million-dollar homes, 98% had three or more trailing zeros.

But when they looked at 356 opening offers from executives and MBA students, 48% were maximally round. Not a single one was specified to the dollar.

Here's why precision matters: it signals knowledge. A round number like $50,000 feels like a guess. A specific number like $48,750 suggests calculation. It implies you've done your homework, consulted data, and arrived at this exact figure for good reasons.

When someone receives a precise anchor, they assume the other party is informed. They make smaller adjustments because they believe there's less room to negotiate. The precision itself becomes persuasive.

How Anchoring Hijacks Your Brain

Two main theories explain why anchoring works so well.

The first is the anchor-and-adjust hypothesis. You hear a number, use it as a starting point, and adjust from there. But adjustments take mental effort. You stop adjusting when the number feels "good enough," which means you stop too soon.

The second theory—now considered more accurate—is selective accessibility. The anchor primes related information in your memory. If someone suggests $80,000 for a salary, your brain starts retrieving reasons why $80,000 makes sense. You think about comparable positions at that level, lifestyle expenses that fit that budget, and market data supporting that range.

The anchor doesn't just set a number. It filters what information your brain considers relevant.

This explains why anchoring works even with obviously irrelevant numbers. In Tversky and Kahneman's original experiments, people's social security numbers influenced how much they'd pay for products. Completely random digits changed their willingness to spend.

The effect is so robust that researchers call it "one of the most powerful biases in psychology." It shows up everywhere: stock trading, medical diagnoses, courtroom sentences, and corporate deals.

When Anchors Go Wrong

The anchoring effect doesn't only shape negotiations. It drives errors across fields.

In medical settings, initial diagnoses become anchors. Studies found that anchoring contributed to diagnostic errors in 36% to 77% of cases. A doctor who first suspects pneumonia interprets subsequent symptoms through that lens, potentially missing other conditions.

In courtrooms, suggested sentences anchor judges and jurors. Prosecutors who request longer sentences often get them—not because the evidence changed, but because the number shifted the reference point.

Investors anchor on historical stock prices. They hold losing positions too long, waiting for the stock to return to its "true value"—a number that exists only in their memory.

Group decisions aren't immune. When someone voices an idea early in a meeting, that idea becomes the anchor for the entire discussion. Teams reference it, modify it, and orbit around it—even when better alternatives exist.

Breaking Free From the Anchor

The good news: you can counteract anchoring effects.

Galinsky and Mussweiler found that perspective-taking eliminates the first-offer advantage. When negotiators thought carefully about their opponent's alternatives or their own target price beforehand, the anchor lost its power.

Setting specific, ambitious goals before negotiating provides an alternative anchor. If you walk into a salary discussion with a well-researched target of $92,000, an opening offer of $75,000 won't pull you as far off course.

Preparation matters more than most people realize. Know your reservation price—the absolute minimum you'll accept. Know your target. Know the market range. These numbers become your internal anchors, competing with whatever the other party throws out.

When you receive a first offer, pause. Ask yourself: "If I hadn't heard that number, what would I think this is worth?" Consider comparable deals, market data, and objective criteria. Force your brain to evaluate the offer independently rather than as an adjustment from the anchor.

If you're making the first offer, go precise. Do your research, calculate a justified number, and present it with confidence. The more specific your anchor, the more it will stick.

The Strategic Question

Should you always make the first offer?

Not necessarily. Going first has advantages when you have good information about the negotiation range. If you know what comparable salaries, products, or deals look like, you can set a strong anchor that pulls the conversation your way.

But if you're uncertain about the range, going first can backfire. You might anchor too low and lose value you didn't know was available. In these situations, asking questions and gathering information first makes sense.

Some negotiators use "phantom anchors"—mentioning extreme values without making formal offers. "I've heard of similar properties selling for $800,000" isn't an offer, but it plants a number in the conversation.

The key is awareness. Whether you're making or receiving the first offer, understanding anchoring transforms you from someone subject to the effect into someone who can use it strategically.

Why This Matters Now

Negotiations happen constantly. You negotiate salaries, freelance rates, home prices, car purchases, project deadlines, and resource allocations. Every time someone mentions a number first, anchoring is at work.

Most people negotiate instinctively, unaware that a cognitive bias is shaping the outcome. They accept offers that feel reasonable without realizing their sense of "reasonable" was manufactured by an anchor.

The research is clear: first offers shape final deals. The correlation is too strong and too consistent to ignore. A meta-analysis of 119 journal articles published since 1967 confirms it across contexts, cultures, and communication methods.

Understanding anchoring doesn't make you manipulative. It makes you informed. It helps you recognize when you're being anchored and how to respond. It shows you how to make first offers that serve your interests while remaining fair and justified.

The next time you enter a negotiation, remember: the first number matters enormously. Whether you say it or hear it, that number will echo through every subsequent exchange.

Choose it carefully.