The reason a price mentioned second feels negotiable
The first number becomes the frame the second is judged against. Order alone decides which figure is the reference and which is a proposal.
Filed by The Archivist 2 min read
Intuition test — answer before you read on
Why does the order of two prices change which one seems negotiable?
Correct answer: B
Option A is recency and primacy in memory, not evaluation. Option C describes practice rather than mechanism. Numerical judgements are pulled towards an initial figure even when it is known to be arbitrary, and evaluating an anchor makes anchor-consistent information selectively accessible for the judgement that follows.
List price forty, our price thirty-two. Thirty-two is the only figure anybody will pay and it reads as a discount. Reverse the order — our price thirty-two, others charge forty — and thirty-two reads as the number under discussion.
What everyone sees
Two numbers presented together are assumed to be compared symmetrically, with the buyer weighing both. Comparison is not symmetrical. The first figure establishes the standard, and the second is then evaluated as a movement away from that standard rather than on its own terms.
What is actually happening
Tversky and Kahneman demonstrated anchoring with arbitrary starting values, finding that numerical estimates were pulled towards an initial figure even when participants knew it had been generated at random — and that awareness of the anchor did not remove the effect. Mussweiler and Strack identified the mechanism as selective accessibility: evaluating the anchor makes anchor-consistent information more available, so the subsequent judgement is constructed from a set of considerations the anchor has already shaped. Applied to two prices, the second figure is not compared with the first so much as generated from it, which is why the same pair in the opposite order produces different perceptions of what is fixed and what is open.
Why it stays hidden
The asymmetry hides because both numbers are visible. Nothing has been concealed, both figures can be checked, and a buyer who is asked will say they saw both. What they cannot see is that the order assigned the roles — reference and proposal — and role assignment is not a property that either number displays.
The second number is not compared with the first; it is generated from it. Order assigns which figure is the reference and which is up for discussion.
The second number is not compared with the first; it is generated from it. Order assigns which figure is the reference and which is up for discussion.
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The second number is not compared with the first; it is generated from it. Order assigns which figure is the reference and which is up for discussion.
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Sources & further reading 2
- Tversky & Kahneman — judgement under uncertainty: heuristics and biases
- Mussweiler & Strack — comparing is believing: a selective accessibility model of judgemental anchoring
Cross-references
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