[trjordan]

According to the article, that's not what happens at all. In the case of personal injury lawsuits, there is no rebound, and people who ask for more simply get more.

It may be true that if you set a high price, and delay telling the customer about a deal, they will leave before you reveal the lower price. However, that's not what is typically done, and it seems like showing a deal is always more effective that just starting at a lower price.

[xox]

it seems like showing a deal is always more effective that just starting at a lower price.

If you were to believe the article's unambiguous take on this, then your interpretation would be correct. However, I believe this is a naive view or one that is only true in limited situations and often not true in the reality of the marketplace where an unreasonably high price can simply turn someone away without leaving the possibility for any further negotiation.

[Periodic]

I think the key that the buyer must believe there is room for negotiation. If I walked in to a Best Buy and saw the only TV there was being sold for $10k, I'd walk out. But if I saw that one TV was $10k, but with slightly fewer features and slightly smaller size was less, then I have entered a negotiation where we agree on what I'll pay for a given feature set, but I may have anchored on the $10k figure already.

[trjordan]

The point is not actually negotiation, but a perceived deal to be had. You don't have to think you can argue for a lower price, you just have to see that the TV is being sold for $10k, then see the "SALE!" sign next to it that tells you the TV is on sale for $3k. By then, you've already anchored to 10k, and the "negotiation" took 3 seconds.

Full negotiations will definitely drive some people away, but to use anchoring effectively, you can definitely advertised a "standard" price and the real price. With that, I don't see how you'd lose somebody based on that original, and you'd gain a few based on the perceived deal.

[Periodic]

You're right. My point only applies when we're talking about making offers in a vacuum. This thread was discussing making offers or demands such as for salary, where there aren't different numbers floating around. In fact, if you were the first person to interview for a job and demanded a high price, the next guy might look like a bargain in comparison. It is when the other side believes there is room for negotiation that you can make a high/low offer and take advantage of anchoring. If they don't believe they can negotiate then you'll just drive them away.