A $350 cat tree taught me why the first price you see quietly decides what feels “reasonable.” Plus three small nudges to catch it before it costs you.
Money Nudges — Part 1 of 3: Anchoring
As a new owner of two kittens, I have a new hobby: “cat enrichment.” (i.e., another shopping compulsion.)
Cats climb and need vertical space (I’ve read), so clearly, they need a cat tree. What do those cost? No idea. I searched “mid-century modern cat tree.” Whoa. $999 for a helix-inspired designer model. But right next to it — a modern tree for just $350. I bought it.
Suddenly, $350 felt like a bargain even though minutes earlier, I would’ve guessed a cat tree cost under $100.
What happened? My brain got stuck.
What’s actually happening
You may call it a bad decision, but it’s a well-documented human quirk called anchoring bias: the brain uses the first number it sees as a reference point for judging the range of every decision that follows. Researchers have studied it for 50 years and, once you spot it, you can nudge around it.
It shows up everywhere money moves: the price tag on a t-shirt, the listing price on a house, the salary offer a hiring manager throws out first. This isn’t just a quirky brain bias — it costs you real money, whether that’s an extra $50 on a whim purchase or tens of thousands on a house or a salary. Over the next three posts, we’ll nudge our way through all three.
The anchor doesn’t even have to make sense
Researchers once asked a room of MIT students to write down the last two digits of their Social Security number. Then they showed the students a bottle of wine, a cordless keyboard, and a box of chocolates, and asked them to bid on each one, as if in an auction.
Their SSN digits had nothing to do with anything — they just wrote them down first. But the students with the highest SSN digits bid markedly more on every single item than the students with the lowest digits. A completely random number subversively shaped everyone’s sense of what things were worth.
That’s the unsettling part of anchoring bias: it works even when the anchor is nonsense. It’s just the first number you see.
It’s not just price tags
Once you know what anchoring looks like, you start noticing it everywhere. Three examples you’ve probably run into this week:
- The “suggested retail price.” That crossed-out $100 next to a $70 price tag has nothing to do with what the item usually sells for — it’s just an anchor, planted so $70 feels like a discount instead of a price.
- The tip screen. You tap your card, and the screen shows three suggested tip options: 18%, 22%, 28%. In a study of millions of NYC cab rides, when the lowest default tip option moved higher, far fewer riders left the smallest tip — and far more left the largest one, even though nothing about the ride itself changed.
- The three-tier subscription page. Web-only for $59. Print-only for $125. Print and web for $125. The middle option makes no sense — why would anyone choose it? But in a real experiment using that exact pricing, adding that “pointless” middle tier caused the number of people choosing the priciest bundle to jump from about a third to over 80%. Nobody picked the middle option — it didn’t need to be chosen. It just needed to make the most expensive option look reasonable by comparison.
None of these are accidents — retailers rely on them. They’re deliberate uses of the same brain wiring that made my $350 cat tree feel like a deal.
Three small nudges
You can’t turn anchoring off, but you can build a few small habits to keep it from steering your decisions:
- Decide your number before you look. Research prices using a source that has no stake in the sale: a price-tracking site, what you paid last time, or a review site with no affiliate commissions (like Consumer Reports or Rtings.com). That way, your number comes first — not the store’s.
- When something feels like a deal, pause and name the anchor. The real question isn’t how much am I saving? — it’s what’s the number I saw first, and does it actually reflect what this is worth? Half the time, just noticing the anchor is enough to loosen its grip.
- Compare across categories, not within them. Instead of judging a $50 purchase against its own inflated $100 “original” price, compare it to something totally unrelated. How many coffee runs is that? How many months of a subscription you’re already paying for? That helps you think about the true value to you, instead of focusing on a so-called “deal.”
These nudges don’t require willpower. They just help you recognize the tricks being played on your brain, so you can make choices that actually make sense to you.
Next up in the series: what happens when the “first number” is a $600,000 house — and why even professional real estate agents can’t out-think anchoring bias either.