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The phenomenon is called anchoring[1], and it works like this: the first price we see anchors our thinking about additional information. This is why furniture stores have a perpetual sale.

"Oh look, this $2500 sofa is only $1899.99 right now. What a great deal!"

One experiment had respondents use the last two digits of their social security number as the initial price for a bottle of wine or other good. This completely-arbitrary price had a strong correlation with the price they were willing to pay for the item.

The effect is described in greater detail in Thinking, Fast and Slow[3]

[1] https://en.wikipedia.org/wiki/Anchoring

[2] http://www.inc.com/the-build-network/the-anchoring-effect.ht...

[3] http://www.amazon.com/Thinking-Fast-Slow-Daniel-Kahneman/dp/...

Predictably irrational by Dan Ariely has a good number of case studies that I think illuminate the topic particularly well:

Unsurprisingly there's some sort of combo deal to get Thinking Fast and Slow with it.

If you remove the spaces before that link it will be clickable.

Ugh, I always forget that I shouldn't do that here (I move URLs out of the way like this for email) and its been too long to edit. http://www.amazon.com/Predictably-Irrational-Revised-Expande...

My link [2] actually has a video of Ariely talking about this stuff.

I wonder how well the `social security number` anchoring study replicates?

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