Which statement best describes the anchoring effect?

• A. A psychological phenomenon
• B. Negotiators make insufficient adjustments away from the stated number
• C. Anchoring guarantees a favorable outcome
• D. It applies only to price negotiations

Answer: (B)

Anchoring is a cognitive bias where the first number or piece of information encountered serves as a reference point, and people don’t move far from that anchor when judging or deciding. In a negotiation, the stated price acts as this anchor. Because of the bias, negotiators make only partial adjustments away from that initial figure, so the final deal tends to stay influenced by the opening number.

That makes the best description one that captures both the reference point and the typical response—insufficient adjustments around that initial price. It’s not about guarantees or outcomes and it isn’t limited to price talks; anchors shape judgments in many kinds of decisions. For example, starting with a high initial price can pull the eventual price higher than it would have been without the anchor, even if that higher number isn’t the true value.