Are you letting the 1st number in the room make the decision for you? Whether you're managing people or conflict, anchoring bias could be steering your decision
Understanding Anchoring Bias: A Practical Guide for Managers and Mediators
by Chris Breedon
Introduction
Anchoring bias is one of the most pervasive and subtle cognitive biases that can influence decision-making, negotiations, and interpersonal interactions. Whether you are managing a team or mediating conflict, being aware of how anchoring bias operates is vital. It can mean the difference between a fair outcome and one unduly influenced by irrelevant or arbitrary starting points.
This blog explores what anchoring bias is, how it affects managerial and mediation contexts, and offers practical examples and exercises to help you recognise and counteract its effects.
What is Anchoring Bias?
Anchoring bias refers to the human tendency to rely too heavily on the first piece of information (the “anchor”) when making decisions. Once this anchor is set, subsequent judgements are made by adjusting away from that anchor — and these adjustments are rarely sufficient.
The concept was first introduced by cognitive psychologists Amos Tversky and Daniel Kahneman in 1974. Their experiments showed how initial exposure to a number — even if it was randomly generated —could influence people’s estimates and decisions.
For example, if you are told the average price of a used car is £12,000, and then shown a car priced at £10,000, you’re likely to perceive it as a bargain. But if the first number you hear is £8,000, that same car seems overpriced. The first number “anchors” your expectations.
Why Anchoring Matters in Management and Mediation
1. Managerial Decision-Making
Managers make countless decisions daily — from hiring and salary negotiations to performance evaluations and strategic planning. Anchoring can affect all these areas. For instance, the first salary expectation presented in a negotiation often sets the tone for the rest of the conversation, regardless of how reasonable or accurate it is.
2. Conflict Resolution and Mediation
In mediation, the first proposal or statement of facts can set a cognitive benchmark. Even when this initial figure or claim is extreme, it can shape the course of the conversation and influence final outcomes. Mediators who fail to recognise this may unwittingly allow an unfair anchor to persist.
Real-Life Examples of Anchoring Bias
Example 1: Salary Negotiations
A candidate applies for a project manager role. The hiring manager had internally budgeted £42,000 for the position. During the interview, the candidate says they’re seeking at least £50,000. Despite the company’s budget, the manager begins to feel pressure to offer closer to the anchor — maybe £47,000 — fearing they’ll lose a good candidate. The anchor distorted their original judgement.
Lesson: Anchors can inflate decisions beyond their original scope. It's essential to separate anchors from objective evaluations.
Example 2: Dispute Over Compensation
In a workplace mediation involving a dispute between an employee and their manager over unpaid overtime, the employee claims to have worked 100 unpaid hours. While this number might be exaggerated, it becomes a psychological reference point. Even if evidence supports only 60 hours, the manager feels pressured to meet somewhere in the middle, say 80 —based not on facts, but on the anchoring effect.
Lesson: Extreme claims can shift perceived fairness, especially when anchors are accepted without challenge and may not be based on fact.
Example 3: Performance Reviews
A team leader, preparing for annual reviews, starts with the strongest-performing employee, who receives a glowing report and high ratings. Subconsciously, this review becomes an anchor. The next employee, who is average, may receive lower scores than deserved because they don’t compare as favourably with the first.
Lesson: Anchors can come from previous experiences, not just numerical values. Managers need to assess performance on absolute, not comparative, standards.
Exercises: Recognising and Overcoming Anchoring Bias
Exercise 1: Spot the Anchor
Objective: Raise awareness of how initial information shapes judgement.
Instructions:
Expected Outcome: Group A will tend to guess lower, and Group B higher — even though the actual number is around 54. This shows how the initial number, even if arbitrary, acts as an anchor.
Discussion: How does this affect your approach in meetings, appraisals, or negotiations?
Exercise 2: Neutral Starting Points
Objective: Practise identifying neutral or fact-based anchors.
Scenario: You’re mediating a workplace conflict where one team member claims another failed to meet deadlines “most of the time.”
Instructions:
Lesson: Mediators should seek quantifiable evidence and reset the anchor when possible.
Exercise 3: Pre-Commitment Plans
Objective: Learn to set decisions in advance to resist in appropriate anchors.
Scenario: As a manager, you’re about to conduct salary reviews. Create a structured evaluation system based on:
Task:
Reflection:
Which version led to more consistent decisions?
Did employee anchors affect your judgement in the second scenario?
Strategies for Managers to Counter Anchoring Bias
1. Delay Final Judgement
Give yourself time between receiving the anchor and making a decision. Allow initial information to “cool off” before committing.
2. Re-anchor with Objective Data
Seek reliable, independent data — whether market rates, performance metrics, or verified accounts — and use these to reset the discussion.
3. Prepare in Advance
Have clear, documented criteria for decisions before entering any negotiation or mediation. Pre-defined frameworks reduce the influence of persuasive anchors.
4. Recognise Emotional Anchors
Anchors aren't always numbers. A dramatic personal story, emotionally charged language, or strong visual imagery can serve as anchors. As a mediator, note when emotion is being used to frame the narrative and guide parties back to the facts.
5. Train Others
Help your team recognise how they might be susceptible to anchoring. Run workshops or incorporate short exercises in training sessions to build awareness. Prospero Mediation and Training can help you here.
How Anchoring Intersects with Other Biases
Anchoring often works in tandem with other biases:
Understanding these interactions is critical for professionals involved in complex interpersonal or organisational decisions.
Conclusion
Anchoring bias is a powerful yet often invisible influence on how we judge, decide, and negotiate. For managers and mediators, unchecked anchors can lead to skewed outcomes, compromised fairness, and damaged trust. But when recognised and addressed, this bias becomes manageable.
By building awareness, relying on data, and preparing thoughtfully, you can make more balanced decisions and guide others to do the same. Whether you’re allocating resources, resolving conflict, or leading a team, mastering anchoring bias will make you a more effective and fair-minded professional.
Final Thought
The next time you walk into a room — whether to resolve a disagreement or approve a budget — pause and ask yourself: “What’s anchoring me right now?” That question alone might help you make better decisions.
Are you letting the first number in the room make the decision for you?
Whether you're managing people or mediating conflict, anchoring bias could be subtly steering your choices.
