Why anchoring bias cutting you rough deal in salary negotiations?
What's the story
Salary negotiations are tricky and many lose out on their desired pay grade simply because they let the management pitch the salary to them.
If you let the HR or the management set the terms of reference and the range for your salary, chances are that you will settle down with a salary that is way below your expectation and your pay grade.
Anchoring bias
What works against the poor salary negotiator?
Well, it is the anchoring bias. This is a heuristic or a generalized rule of thumb that says that our brains have the tendency to accept the first piece of information on a given topic as a reliable reference or anchoring point.
Anchoring bias works everywhere, and mostly it works in favor of people who are aware of its unconscious impact on our actions.
CRED
With CRED, step into a new world of top-end benefits
Anchoring bias comes into play even when you are using CREDit cards. You can have access to a world of premium benefits by managing your credit card dues on the CRED app.
Anchoring bias might be blinding you into believing that the low-key benefits that you enjoy from your credit card company are the only benefits that you can have access to.
Price negotiations
How does the anchoring bias play out in real life?
Let's say you have your eyes set on a furniture item, suppose, an uber-comfortable chair. You know that buying it could burn a hole in your wallet.
So, you wait for the sale season and grab it at a 15% discount. You are happy with your purchase until the next sale season when the chair goes for a 30% discount at the original price.
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Salesmen often use the anchoring bias to their advantage
Salesmen often use the anchoring bias to their advantage by pitching a price that has little to do with the actual cost of the chair. Customers gullibly pay up the inflated price. Meanwhile, the salesman is laughing all the way to the bank.
Stock markets
What role does anchoring bias play in stock markets?
Profits or losses are made on the basis of the assessment of the share price being expensive or cheap. However, even their price assessment stems from the stock price movement of the last few weeks or months.
Price action traders take this price data as the range within which the share is likely to trade without perusing in depth the health of the company.
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Traders and investors are fooled into selling good stocks
Consequently, traders and investors are fooled into selling good stocks which possibly could have turned multi-baggers in the long run. It also leads them to stick with penny stocks that ideally they ought never to have invested in.
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Courtrooms see anchoring bias tendencies too
It is not just in business segments that the anchoring bias leaves its mark but also in courtrooms. Research reports suggest that judges also have anchoring bias tendencies. Different judges are known to award stricter punishments in years or fines for the same crime.
CRED app
With CRED, you have access to numerous benefits
Anchoring bias comes into play even when you are using credit cards. You can have access to a world of premium benefits by managing your credit card dues on the CRED app.
Anchoring bias might have you believe that the benefits from credit card companies are the only benefits you have. With CRED, step into a new world of top-end benefits and unmatched convenience.
Details
Why should you use CRED for financial management?
CRED app users can efficiently manage their dues on the app and never miss a payment date. It keeps you in the loop on your spending, presents graphical representations of your spending patterns, and alerts you to hidden costs.
Shed off your anchoring bias and those old spend management apps. Move to CRED and experience a whole new world of benefits and ease.