Understanding the anchoring effect can save and make you money

Before you sell that car or hold your yard sale or place your listing in Craigslist, you need to understand the anchoring effect. It's been used against you with great success, but now you can turn the tables and benefit from it.

You've seen the anchoring effect in action a million times, usually in the form of a suggested retail price. When you see a purse with a price tag that claims it normally sells for $400, but is marked down to $200, that little "yippee!" you feel inside at the prospect of getting a bargain? The anchoring effect. The seller simply told you that the purse was worth $400, and we tend to accept this line of bull because we are basically a trusting people and trained to use price as our gauge of value.