What Is Anchoring Bias? Negotiation’s Most Misunderstood Mental Shortcut

One number can shape an entire negotiation. 

Here’s how:

In 1974, behavioral economists Amos Tversky and Daniel Kahneman asked participants to spin a wheel marked with random numbers—then estimate the number of African countries in the United Nations. 

The results were fascinating. 

Those who landed on a low number gave significantly lower estimates than those who landed on a high one. This simple study revealed a powerful truth about human behavior: our brains latch onto the first number we see, even when it's irrelevant.

This phenomenon is known as anchoring bias—and it’s one of the most influential cognitive biases in negotiation. Whether you're buying enterprise software, negotiating a supplier agreement, or discussing compensation packages, your initial offer sets the anchor point. 

So you have to make it strong, and with confidence. 

Here’s how anchoring works—and how to use it to your advantage.

Key Takeaways

• Anchoring bias causes people to rely heavily on the first number presented in a negotiation.
• RED BEAR teaches negotiators to set strategic, data-backed anchors to influence expectations and value perception.
• Anchors can shape discussions around price, lead times, service terms, and more—not just cost.
• Responding to a customer's anchor requires reframing the conversation and reinforcing your position with credible benchmarks.

What Is Anchoring Bias?

Anchoring bias refers to our tendency to rely too heavily on the first piece of information we receive—known as the anchor point—when making decisions. 

In negotiations, this means that the initial price, offer, or number becomes the baseline for all future discussions, even if it's arbitrary or extreme.

This cognitive bias influences how people perceive value and fairness. Once the anchor is set, all subsequent judgments are made in relation to it—a concept known in psychology as the anchoring and adjustment heuristic. People adjust away from the initial value, but their adjustments are usually insufficient, leading to skewed outcomes.

In supplier negotiations, this bias can work for or against you. A strong initial anchor can define the negotiation environment and pull the final agreement closer to your ideal outcome. 

But a weak or unplanned anchor—especially one set by the other party—can leave value on the table before the real conversation even begins.

Anchoring bias suggests that decisions are rarely made in a vacuum. They’re made relative to a reference point, and that reference point can be carefully managed.

The Psychology Behind Anchoring Bias

The anchoring effect isn’t just a trick of perception—it’s a deeply rooted psychological shortcut that affects how we interpret value, risk, and outcomes during negotiation. 

First defined by Tversky and Kahneman, the anchoring and adjustment heuristic explains how people use an initial value (the anchor) to start their evaluation, then make adjustments from that point.

The problem? Those adjustments are rarely enough. Even when the anchor is arbitrary—or clearly unrealistic—our brains struggle to compensate. That’s why implausible anchors can still sway final outcomes, and why even experienced negotiators sometimes base decisions on irrelevant anchors.

This bias plays out across industries and deal types:

• In salary negotiations, the first number mentioned influences perceptions of a “good deal.”
• In supplier negotiations, early price suggestions shift the entire conversation, even if better data emerges later.
• In customer conversations, initial offers can make your solution look expensive or cheap relative to a flawed comparison.

Psychologists call this the selective accessibility theory—once an anchor is introduced, our brains selectively retrieve anchor-consistent information that supports it. In essence, our perception narrows, not widens.

RED BEAR clients are trained to recognize this mental shortcut for what it is: a predictable pattern that can be used strategically, ethically, and effectively throughout the decision-making process.

How Does Anchoring Bias Work?

Anchoring bias works by subtly shifting how we evaluate new information. 

Once an anchor point is set—whether it’s a proposed price, volume, or delivery date—our brains treat it as a reference point, and every subsequent judgment gets filtered through that lens.

Research has shown that even experienced professionals are susceptible to this bias. For instance, a study by Englich and Mussweiler found that judges' sentencing decisions were significantly influenced by arbitrary sentencing demands, demonstrating the pervasive nature of anchoring effects in legal decision-making.

These findings have direct implications for procurement. In supplier negotiations, anchoring occurs the moment a figure is introduced—even if it’s casual or hypothetical. That initial offer frames the conversation, shaping what both sides see as a reasonable outcome.

But not all anchors are created equal. It’s important to consider:

• Self-generated anchors: Numbers you propose intentionally to drive the negotiation.
• External anchors: Numbers set by the other party or market factors.
• Irrelevant anchors: data points that have no logical connection to the deal, but still influence thinking (e.g., last year’s pricing in a different region).

What makes anchoring so powerful is that it’s invisible. Most people rely heavily on the first number they hear without realizing it, even if it has no bearing on the target object or value. 

That’s why anchoring bias remains one of the most significant effects in modern negotiation science—and why RED BEAR negotiators are trained to set the tone before the other side does.

How To Anchor Well in Supplier Negotiations

Anchoring isn’t a gimmick—it’s a strategic lever RED BEAR clients use to shape high-value outcomes in supplier negotiations. 

When done well, it influences how suppliers perceive your needs, budget, and expectations, without ever overstating your position.

Set High Anchors

In strategic sourcing discussions—like multi-year contracts for critical components—the initial price can swing millions. If a buyer opens with a 12% reduction target citing operational efficiencies, that number becomes the anchor, even if the supplier initially aimed to increase pricing.

Or one group might open with a firm $475K offer supported by volume data and competitor benchmarks. Another might open at $515K, citing past pricing trends and favorable payment terms. 

The same applies to non-price terms like lead times, exclusivity, or payment terms. Each initial anchor subtly redefines what the supplier sees as a “reasonable” deal.

That’s why RED BEAR teaches that anchoring isn’t about winning in the first move—it’s about establishing a strong frame that guides the entire discussion.

Since a person’s brain adapts and begins searching for information to confirm the “anchor” number, it’s best to reinforce your anchor with relevant facts, volume logic, or internal constraints. 

Don’t Push It Too Far

While anchoring is powerful, RED BEAR also trains teams to watch out for implausible anchors or unrelated reference points. 

For example, referencing last year’s pricing from a different geography or business unit can undermine credibility. When anchoring occurs without context, it’s more likely to be rejected, or worse, damage the relationship.

Anchoring well means anchoring with intent. RED BEAR helps procurement professionals set high expectations and support them with disciplined strategy, ensuring that the anchor becomes a tool for alignment.

How To Respond To Anchoring in Customer Negotiations

Anchoring doesn’t just affect buyers; customers do it, too. Whether intentional or not, your clients may open with numbers that are far from your target. The key isn’t to reject the anchor—it’s to reframe it.

Start by Recognizing It

If a customer opens with, “We’ve seen vendors do this for $100K,” they’ve just set an anchor—even if that number is outdated, unrealistic, or pulled from a different deal. RED BEAR trains sales professionals to pause and assess: Is this a serious offer or a positioning move?

Don’t Debate, Redirect

Rather than arguing the number directly, RED BEAR recommends pivoting to your value. You might say, “That number seems quite a bit lower than what we’ve seen in similar scopes. Let’s unpack what’s included there versus what’s on the table today.”

Some anchors aren’t worth engaging. If a client references a low-ball competitor or an unrelated offer, it's often best to maintain composure and return to what matters: risk, outcomes, and the cost of failure.

Use Smart Reframing

Reframing the conversation means introducing a new reference point. 

Instead of getting trapped by the customer’s anchor, introduce a more relevant benchmark: “In the last three enterprise deals we’ve done with similar specs, pricing averaged closer to $140K due to additional support and lead-time commitments.”

Bring in Your Own Strategic Anchors

If the customer sets a low anchor, you can counter by setting your own. Done respectfully, this can reset expectations and move the conversation toward common ground:

“Given the risk-sharing and SLA guarantees we’re including, our clients typically see value at $155K—especially over multi-year agreements.”

In short, you don’t have to accept the customer’s frame. RED BEAR negotiators learn how to listen, reset, and re-anchor with purpose. 

Make Anchoring Work for You

Anchoring bias is one of the most powerful forces in negotiation, and it works whether you realize it or not. 

From that first number on the table, everything that follows is filtered through a reference point. That’s why RED BEAR teaches procurement and sales professionals to use anchoring intentionally—not reactively.

By setting bold but credible anchors, you define what’s reasonable before the other side can. And when the anchor comes from your counterpart, you know how to reframe the conversation and protect value.

Anchoring isn’t just psychology. It’s a negotiation strategy rooted in planning, data, and confidence.

Ready to learn how RED BEAR helps teams turn anchoring into a strategic advantage?

Contact RED BEAR today to explore how our training can help your team anchor with purpose—and close with strength.