How does the anchoring bias typically manifest in negotiation scenarios?

The anchoring bias in negotiation scenarios typically manifests as an undue reliance on the initial piece of information presented – the 'anchor' – which then disproportionately influences subsequent judgments and offers, even if the anchor is arbitrary or irrelevant. The initial offer or demand, even if extreme, sets a cognitive reference point that biases the other party's perception of the value being negotiated. For instance, if a seller initially asks for a very high price for a product, even if that price is unreasonable, the buyer's subsequent offers will likely be higher than they would have been if the seller had started with a more moderate price. This effect occurs because the buyer unconsciously adjusts their thinking relative to the initial anchor. Even when negotiators are aware of the anchoring bias, it can be difficult to completely eliminate its influence. The anchor can affect not only the final agreement but also the range of possible outcomes that the parties consider. The party who sets the initial anchor often gains a significant advantage in the negotiation, as the other party tends to gravitate towards that starting point.