Anchoring Bias
Also known as: Anchoring effect
Anchoring bias is a cognitive tendency in which an initial reference point disproportionately influences later judgements. Once an anchor is set — a number, a first impression, an opening position — people adjust away from it insufficiently, so their final estimate stays closer to the anchor than the evidence warrants. Crucially, anchors work even when they are plainly arbitrary, which is what makes the effect so powerful and so easy to exploit unintentionally.
Identified in the work of psychologists Amos Tversky and Daniel Kahneman, anchoring is one of the most robust findings in decision-making research. It matters most where numbers and negotiation meet — precisely the territory of compensation. In a salary negotiation, whoever states the first figure sets the anchor around which the whole conversation orbits; a candidate’s current or expected salary can anchor an offer even when it has little bearing on the role’s real market value.
For hiring and pay decisions, anchoring bias argues for grounding numbers in objective data rather than in whatever figure surfaces first. Anchoring an offer to a candidate’s current salary can entrench existing pay inequities and understate the value of the role — a reason many markets are moving to ban questions about salary history and to publish pay ranges instead. Compensation benchmarking is the direct antidote: it replaces an arbitrary anchor with a defensible market range. Anchoring also affects candidate assessment more broadly — the first candidate interviewed, or the first data point in a CV, can anchor how everyone who follows is judged, which is another argument for structured, criteria-based evaluation.
Frequently asked questions
What is anchoring bias?
Anchoring bias is the tendency to rely too heavily on the first piece of information encountered when making a judgement. Later estimates cluster around that initial anchor even when it is arbitrary or irrelevant.
How does anchoring bias affect salary negotiation?
In salary negotiation, the first figure mentioned becomes an anchor that shapes the entire discussion. A candidate’s current or expected salary can anchor the final offer even when it does not reflect the role’s true market value.
Why do some employers avoid asking about salary history?
Employers avoid it because a candidate’s past salary can anchor the new offer, entrenching existing pay inequities and understating the role’s market value. Using benchmarked pay ranges instead grounds the offer in objective data rather than an arbitrary anchor.
How can anchoring bias be reduced in hiring?
It can be reduced by grounding pay decisions in compensation benchmarking rather than the first number raised, and by evaluating candidates against fixed criteria rather than in comparison to whoever was assessed first. Objective reference points replace arbitrary anchors.