SGT_What is the anchoring effect and how does it work

The anchoring effect is a psychological bias where our judgments and decisions are influenced by an initial piece of information, known as the "anchor." This phenomenon occurs when people rely too heavily on the first piece of information they receive, even if it’s irrelevant or misleading. For example, if you see a luxury watch priced at $5,000 and then come across another watch priced at $1,000, the second watch might seem like a bargain due to the initial $5,000 anchor. This effect can impact various aspects of life, from shopping and negotiations to estimating values and making financial decisions. By understanding the anchoring effect, you can become more aware of how initial information shapes your decisions and strive to make more objective choices. More on this in today's episode of Salty Ginger Talk.