You Are Not So Smart: Why You Have Too Many Friends on Facebook, Why Your Memory Is Mostly Fiction, and 46 Other Ways You're Deluding Yourself

by David McRaney

If you move up to a nice car or a big house, a nice computer or an expensive smartphone, you become anchored and find it difficult to move back down later, even if you should. Those who buy expensive purses know they are being hornswoggled, at least at some level, yet the anchoring effect still reaches into their bank account. Does an $800 Louis Vuitton purse function better than a $25 handbag from Wal-Mart? No, not even if it was hand-made from giraffe leather and stitched by real, magical leprechauns. It’s just a purse. But the anchor is set. Louis Vuitton bags are expensive, and that in itself has social value. People still buy them and are happy with their purchase. If Wal-Mart offered a purse at $800, it would never leave the shelf. The price would be so far from the anchors already set by the store it would seem like a bad deal.