The anchoring bias occurs when we make a decision or evaluation based on the first piece of information received. Our first impression acts as an anchor or reference point to which all subsequent and related information is compared. If the anchor contains incomplete or irrelevant information we can end up making a bad decision.
Retailers rely on the anchoring effect to sell goods and services. For example, if we are shopping for a bicycle and we see an ad for one at 30% off, we will approach that item with the impression that it is a great deal, even though it may still be more expensive than other bikes and may be out of our budget.