Why a steep opening figure makes later ones feel modest

Northcraft and Neale gave real-estate agents identical property data but varied the listing price. Agents who saw a high listing price valued the property thirty-two percent higher than those who saw a low one, despite having access to the same comps and market data. The first number rewired every subsequent judgement.

What everyone sees

Agents deny the listing price influenced them, citing their expertise and independent analysis. Buyers in everyday settings attribute their sense of a “good deal” to their own negotiating skill rather than to the anchor that was set before the negotiation began.

What is actually happening

Tversky and Kahneman’s anchoring-and-adjustment heuristic shows that initial values serve as reference points from which adjustments are made — and those adjustments are typically insufficient. The high opening figure pulls all subsequent estimates toward itself. Epley and Gilovich refined the model by demonstrating that anchoring persists even when the anchor is blatantly irrelevant, because the adjustment process is effortful and stops prematurely.

Why it stays hidden

The anchor hides because it looks like a starting position, not a strategy. Buyers assume the opening figure is negotiable and feel empowered by the reduction they achieve. But the reduction was measured from a number the seller chose precisely so that any “discount” would still land in profitable territory.