Why are we anchored often? | Hacker News Reader

Why are we anchored often?

models.substack.com

21 pointsremotists25 comments

The advice to starting a negotiation with a favourable number as a conceptual anchor makes the mistake that a number should be at the beginning of a negotiation at all. The whole point of a negotiation is not to haggle down to a price, but to discover a "true" price based on seeking out principles. The point of negotiation isn't to simply raise the number like in the haggle, it's to influence their number to be the effect of your principles, so that the result is everyone feels they've got a good deal.

With practice, you can de-anchor discussions simply by re-framing their anchors using new principles.

e.g. Anchor: "Given your current salary is probably around $50k, we think you're way underpaid and we will offer you $52,500, which is a %5 raise just for switching jobs! You can thank me for getting you this incredible deal by signing right now."

Re-frame: "I really appreciate your initial effort on this. We can't disclose my current salary here because my employer treats it as competitive information and I'm still a member of this team so I can't really comment on that. Let's move the numbers discussion out a bit, and get a sense of the value I can provide in the role. However, looking at the glassdoor and city cost of living salary data for your company, the range you suggested is just below the average salary for other people in the role. I can solve one of your major problems with my unique experience out of the gate, which would take at least a quarter to six months in learning curve for your current team."

This simple re-framing is, destabilize the premise (their guess of your salary), add 2 new objective principles of a) competitive information, and b) glassdoor/city data source, then provide them with relief from the instability stress you created using a soft sweetener (offer of hidden value) without even coming back with a number. This is a simplified case, but you get the idea. So yes, anchoring, but now that you see the reframing to your principles (a new anchor), it's much less of an obstacle.

Anecdotally, I was recently asked "What was your last salary?" in the first call from a potential employer. When I told them I was only willing to discuss my potential future compensation, and not my current one, they immediately declined to interview me further.

A bullet dodged without much effort.

>A bullet dodged without much effort. What is interesting is that they probably thought the same thing. They clearly wanted someone that would capitulate to things that were asked of them.

I already emotionally distanced myself from that company completely, but as far as I remember, their representative was "the hiring manager for Engineering", but very far from the Engineering department and very close to HR.

I honestly assume they simply selected for (as you said) pushovers or potentially liars.

Did this re-framing “framework” come from a book, class, etc.? It sounds well formulated, I’d like to learn more.

Thanks! "Getting to Yes," from the (former?) Harvard Negotiation Project is the foundation, which describes how to find principles and create options to discover a deal you can all be happy with. It's of an era, but so was Euclid, so you'd be kind of conceptually helpless without it.

The idea of negotiation as an empirical process of value discovery, not sure, it might be mine, and the process of walking back the premises and then adding principles is a rhetorical device that originates in Socratic dialogue and seems to have been picked up by critical theory types as a dilution/diffusion technique, but covered and observed in a bunch of different places, some of them probably a bit culty. The idea of negotiation as a dialogue is the artifact of the old stuff, whereas I think it has changed, and while useful, you had to accept the assumption that the affairs of the world were decided by dialogue and reason. It was written before Twitter.

Compressing it this way is mine. I've been accumulating notes for an advanced negotiations book for years, maybe it's finally time to write it. :)

Thank you for the references and synopsis. I’d be happy to purchase copy of that book!

Seems there may be more to it than the article says.

"People are irrational. Example: You wouldn’t buy a new dress, or suit, that costs $100 (‘that’s far too much to spend!’) but you would buy one that was $300, but is now ‘reduced’ to $150 (‘but just look at how far down it’s come!’) Sound familiar? You’re not alone, it’s fairly well-known that humans are irrational (at least by those in advertising- some products in supermarkets are never meant to be bought- they’re just there to get you to buy other products more), but are other animals just as irrational?

Hummingbirds, starlings, and even bees have been shown to be irrational. But what about organisms even smaller than bees? A recent study1 found that even slime moulds (brain-less creatures, which live in damp places like mouldy leaves and logs) can be irrational."

https://blogs.scientificamerican.com/not-bad-science/think-y...

This really implies something fundamental but I can't guess what.

I think a human being irrational isn't the same as a slime mould. The latter doesn't have the ability to be rational in the first place, it's merely doing what it does.

Allow me to turn that into the entirely equivalent "The latter doesn't have the ability to be irrational in the first place", so what's happening in your view?

That's why it's recommended to look into the distance when you enter a Costco, until you pass the electronics section.

That ended way more quickly than I thought it would.

Maybe you're anchored by long articles?

If I see that the link is coming from substack, I'm actually discouraged to click (in fear of imminent "pay for more")

It's lIke the framing effect.

I would have called it a subset of psychological priming, but yes, you've got it.

https://en.wikipedia.org/wiki/Priming_(psychology)

Sort of. They are related though. Anchoring is more about setting the value of something. It is used in negotiations something like "I want 100 dollars for this thing" "that silly I will only give you 50 dollars". I now know you are at least willing to come off 50.

Sounds like overfitting.

> think of you walking into a sports store and the first thing you spot is a pair of track pants worth $500. Now your brain is anchored on that price for a pair of track pants, so when you see another track pant this time with a price tag of $300 you will perceive it as cheap.

No, I will not. $25 for track pants I would perceive as cheap. There is no way in hell, no matter what overpriced items you show me first, that I will perceive $300 for track pants as "cheap".

There are people in the world for whom $500 or even $1000 track pants are viewed as a status symbol and worth the price for the exclusivity alone. That's how they assign value. To be successful in negotiating it's important to understand what the other party values. Time, cost, status, quality, there are many different factors. As a negotiator it's your job to understand the where the other person assigns value and if that value is different from yours, work to shift their perception of value closer to yours. If they only value cost but also want high quality(or a warranty,) and fast you have to shift their understanding that the lowest cost won't come with a warranty or other guarantee of quality but fast may be OK.

Yeah, if the first thing I saw was $500 track pants, I would probably walk out thinking that this store was too expensive.

Some people are less susceptible to biases/anchoring than others.

I know where you're coming from, but you also have to accept that you have anchored yourself at the $25 price.

You've previously been anchored to a price around $25. It's a bad example, but this is a real effect, check out the research, e.g. https://youarenotsosmart.com/2010/07/27/anchoring-effect/

Yes, I’ve been anchored by dozens of sellers selling reasonably priced track pants for at/under $50. There’s no way that anchoring will work for 10x the reasonable/typical price.

If I go into a Toyota dealer, they can’t actually anchor my reference price of a Toyota sedan to $250K by putting a window sticker saying that on a Camry.

They can try:

"A Toyota dealer in Baltimore is offering a brand new 2020 Supra Launch Edition for a nice, round $100,000 – an eye-watering markup of $42k over list."

https://www.carscoops.com/2019/07/would-you-pay-100k-for-a-2...

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