Black Friday Anchoring

The way we choose by comparing with a nearby reference point is called anchoring in behavioral economics.

Business students were asked if they would pay the last 2 digits of their social security numbers for each of several items. Next, each bid the maximum amount they would be willing to pay for each item. Did the initial "anchor" amount influence each student's ultimate bids?

Although students were reminded that the social security number is a random quantity conveying no information, those who happened to have high social security numbers were willing to pay much more for the products.

Now, the reason why Black Friday works so well is exactly thanks to the anchoring phenomenon.

We look at products and their price tags. If we only see one price then we have no material way to understand if we are paying a proper and just amount for the item or not. But, if next to the old(usually higher) price we write down the new discounted price, people, thanks to anchoring, will consider it a good deal.

As a conclusion I say that definitely anchoring shows excessive influence of nearby comparisons.

What will you do? will you be buying more during these days? will you let others manipulate you? let me know. I will let them play with my mind I guess :).

PS: You can also find the concept of anchoring In behavioral finance.