The use of irrelevant information as a reference for evaluating or estimating some unknown value or information. When anchoring, people base decisions or estimates on events or values known to them, even though these facts may have no bearing on the actual event or value.

Here's an everyday example: a friend asks how much you pay in rent for your 800-square-foot apartment, and then asks how much a 1,100-sq-ft apartment would cost to rent in the same building. Would you make an estimate by adding a little more to what you pay even if you've no idea of the actual costs? If so, you would be anchoring your estimate onto what you pay for your apartment.

In the context of investing, investors will tend to hang on to losing investments by waiting for the investment to break-even at the price at which it was purchased. Thus, they anchor the value of their investment to the value it once had, and instead of selling it to realize the loss, they take on greater risk by holding it in the hopes it will go back up to its purchase price.

Investment dictionary. . 2012.

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Look at other dictionaries:

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  • anchoring — noun The tendency of people to place subsequently refined answers to a given question close to the initially estimated answer, giving unduly weight to the initial answer, such as adjusting the initial estimate of 20% to 30% when 90% would be more …   Wiktionary

  • Anchoring — Прикрепление, закрепление; Монтаж (металлических печатных форм на деревянные подставки) …   Краткий толковый словарь по полиграфии

  • anchoring — an·chor || æŋkÉ™ n. heavy object placed in the water in order to hold boats in place; main broadcaster on a TV or radio program, broadcaster; source of security or stability, refuge; text used as the start or end of a hypertext link (Internet) …   English contemporary dictionary

  • anchoring — present part of anchor …   Useful english dictionary

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  • Anchoring of printing inks — Закрепление печатных красок …   Краткий толковый словарь по полиграфии

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