HR wins, you lose

Last month, my friend Chavi called me, frustrated after her job interview.

"The HR person asked me about my salary expectations. I said ₹12 lakhs because that's what I earn now plus a small bump."

"They immediately agreed. No counter. No discussion. Just 'Done.'"

That's when it hit her. They were probably willing to pay ₹15-18 lakhs.

Her "anchor" of ₹12 lakhs had just cost her ₹3-6 lakhs annually. Over a career? That's ₹50 lakhs to ₹1 crore lost.

This reminded me of something that happened to me at a vegetable market in Delhi last year.

The vendor quoted ₹80 per kg for tomatoes.

I immediately thought "That's expensive!" and bargained down to ₹60.

Walking to the next vendor, I saw the same tomatoes priced at ₹40 per kg.

The first vendor's ₹80 had "anchored" my thinking. I felt good paying ₹60, even though it was 50% above the actual market rate.

That's when I realized: We're not negotiating against reality.
We're negotiating against the first number we hear.

Anchoring bias was discovered by psychologists Amos Tversky and Daniel Kahneman.

Their Nobel Prize-winning research showed something disturbing about human judgment.

When people spin a rigged wheel showing random numbers, then guess the percentage of African countries in the UN, their answers cluster around the wheel number.

A wheel showing 65?
People guess around 45% of UN members are African.

A wheel showing 10? People guess around 25%.

The actual answer? 28%.

Here's what happens in your brain:

Harvard research shows that even irrelevant anchors influence decisions. People shown higher prices for products will pay more, even when the prices are completely random.

Brain imaging studies reveal that anchors activate your brain's reward centers before conscious thought kicks in. You're influenced before you even realize it.

The ₹50,000 crore problem hiding in plain sight

This isn't just about tomatoes or entry-level salaries.

India's IPO market demonstrates anchoring at a massive scale.

When companies set IPO prices, they create powerful anchors that persist for months. Research analyzing Indian retail investors found that anchoring bias is a strong predictor of investment decisions, with a coefficient of 0.289.

The cost?

Retail investors consistently anchor to 52-week highs, often buying at peaks and selling at lows.

With over 19 crore demat accounts as of 2025 and 93% of F&O traders losing money, anchoring bias contributes to billions in losses annually.

But the biggest anchoring tragedy plays out in salary negotiations.

Indian women face a brutal anchoring penalty.

Research shows women in India face significant pay gaps compared to men, with disparities that have worsened during the pandemic period.

Here's how anchoring amplifies this:

The anchoring effect compounds.
Over a 30-year career, this costs women ₹30-50 lakhs in lifetime earnings.

Research indicates that women are significantly less likely to negotiate their first job offers compared to men, creating early-career anchoring disadvantages that persist throughout their careers.

The cultural weight of being perceived as "demanding" creates an anchoring trap where women consistently undervalue themselves in salary negotiations, contributing to persistent workplace compensation gaps.

The most sophisticated Indian dealmakers understand anchoring's power.

Take the Reliance-Facebook deal.

Reliance's Manoj Modi orchestrated the entire negotiation strategy around favorable anchoring.

Instead of letting Facebook set the valuation anchor, Modi ran simultaneous negotiations with multiple global investors.

This created competitive anchoring, where each investor's offer became an anchor for the others to beat.

Facebook ended up paying ₹43,574 crore for 9.99% of Jio Platforms.

The initial anchor?

Modi had positioned Jio's value based on its subscriber base (370 million users) and data consumption metrics that favored Reliance.

Traditional Indian negotiation styles already incorporate anchoring principles:

But most people use these accidentally, not strategically.

Back to that Delhi vegetable market.

I started observing vendor behavior more carefully. The smartest ones use sophisticated anchoring:

Price bundling: "₹100 for 2kg" sounds better than "₹50 per kg"
Reference anchoring: "These were ₹120 yesterday, today only ₹80"
Quality anchoring: Shows premium vegetables first, making regular ones seem reasonably priced

Even at the neighborhood level, anchoring shapes economic outcomes.

ICMR studies on Indian consumer behavior confirm that first prices encountered in markets strongly influence willingness to pay across entire shopping trips.

Your anti-anchoring playbook

Here's how to use this knowledge strategically:

Cultural advantage: Indian negotiation culture already values relationship-building and time investment.

Use this.

Extended discussions reduce anchoring power as more information gets exchanged.

The key insight: Whoever sets the first credible number usually wins.

Your goal isn't eliminating anchoring (impossible), but controlling it.

Think about Priya's story again.

By letting the company anchor her salary expectations, she lost ₹50 lakhs to ₹1 crore over her career.

But now imagine she had researched first. Found market rates of ₹15-18 lakhs. Anchored the conversation there.

"Based on my research, similar roles at companies like yours pay ₹16-18 lakhs. Given my specific experience with X and Y, I'm looking at the higher end of that range."

Same person. Same skills. Different anchor.

Career earnings difference: ₹1 crore.

That's the power of one number.

September 2025's economic environment makes these skills critical.

With India targeting $5 trillion economy status, every negotiation involves larger stakes.

The question isn't whether anchoring affects your decisions.

Research proves it does.

The question is whether you'll use this knowledge strategically or remain anchored to others' reference points while they capture value you've created.

Hit reply and tell me: What's the most expensive anchoring mistake you've made in negotiations?

I read every email.

Until next week,
Ritesh