Have you heard about the anchoring effect?
Anchoring belongs to the classic psychological effects: You expose somebody to a random, uninformative number, and it still influences one’s quantitative judgment.
Why is this important for us in pricing?
Price evaluations are also quantitative judgments: What is my willingness to pay? Or what is a fair price?
Anchoring effects in pricing are well-documented – but how long does an anchoring effect last?
We will find out today.
[For a bit more (theoretical) background on the anchoring effect, please check out the video.]
Researchers exposed participants in various studies to random anchors and solicited their willingness-to-pay (WTP) for those products at different times.
The researchers found that…
- anchors raise customers’ WTP for products,
- the higher the anchor, the higher the WTP,
- WTP is the highest right after exposure to anchor,
- anchoring effects drop after one week but then remain the same for eight weeks, and
- reminding on the anchor is not required to lift customers’ WTP.
What does it mean for us?
In short, never underestimate the impact of a good anchor – they are heavy and durable.
[For more details on the exact experiment, please check out the video.]
Yoon, S., & Fong, N. (2019). Uninformative Anchors Have Persistent Effects on Valuation Judgments. Journal of Consumer Psychology. 29(3), 391–410.