Anchoring and adjustment is a decision-making bias where people rely too heavily on the first piece of informationthey see (the “anchor”) and do not adjust enough from it when making decisions.

In investing and everyday decisions, this can affect how people judge prices, returns, or value—even when better or more accurate information is available.

A man in Surat wanted to buy a used car and saw an online listing where the seller quoted ₹6,50,000. Even though similar cars were selling in the market for around ₹5,20,000 to ₹5,40,000, the first price he saw stayed in his mind.

During negotiation, he kept adjusting from that initial number and felt he was getting a good deal when the price was reduced to ₹6,10,000. Because his thinking was anchored to the original quote instead of actual market value, he ended up paying much more than the car was worth.

anchoring
behavioural finance