The reason yesterday’s price feels like the right price
A number you saw once becomes the standard against which every later number is judged, even when you cannot remember where the first one came from.
Filed by The Archivist 2 min read
Intuition test — answer before you read on
A shopper sees a product whose price has risen by twelve per cent. What does the old price become?
Correct answer: B
The previous price functions as an anchor. It sets the range within which the new price is judged, and it does so before any rational comparison is attempted. The anchoring effect operates whether or not the person is aware of it.
The shop raises the price of a jar of honey by twelve per cent. You do not check inflation data or compare suppliers. You simply feel that it used to cost less. The feeling is precise: five units, not four — as though the old figure were still printed on the label you threw away months ago.
What everyone sees
Shoppers register the increase without studying it. They describe the new price as too high, and the description requires no calculation, only a comparison with the number they recall. Because the recall feels effortless, the comparison feels objective, and anything that feels objective is treated as evidence rather than habit.
What is actually happening
The remembered price is an anchor, and anchoring does not require the anchor to be relevant or even correct. Tversky and Kahneman showed that arbitrary starting values pull subsequent estimates toward themselves, and later work on incidental anchoring extended the finding to numbers encountered in unrelated contexts. The previous price qualifies twice over: it is both a number and a direct predecessor, so its gravitational pull on the new judgement is unusually strong.
Why it stays hidden
The mechanism hides because the anchor masquerades as knowledge. Knowing what something used to cost feels like expertise — it is your own shopping history, not a guess — so questioning it feels like questioning your own competence. The old price also benefits from its disappearance: once the label changes, the only copy left is in memory, where it is immune to inspection.
The last price paid is not evidence of the right price. It is the starting point of a comparison that was never asked for.
The last price paid is not evidence of the right price. It is the starting point of a comparison that was never asked for.
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Sources & further reading 3
- Tversky & Kahneman, "Judgment Under Uncertainty: Heuristics and Biases", Science, 1974
- Ariely, Loewenstein & Prelec, "Coherent Arbitrariness", Quarterly Journal of Economics, 2003
- Furnham & Boo, "A Literature Review of the Anchoring Effect", Journal of Socio-Economics, 2011
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