Explain the concept of anchoring in salary negotiations.

Explain the concept of anchoring in salary negotiations.

Anchoring in salary negotiations refers to the cognitive bias where the initial offer or reference point presented during negotiations heavily influences the final outcome. The concept suggests that individuals tend to rely heavily on the first piece of information they receive (the anchor) when making decisions. In salary negotiations, the initial salary offer serves as the anchor, shaping the subsequent negotiation process. Both the employer and employee may strategically set their anchors to influence the final salary agreement.