When you set out to buy something—a car, for example, or a laptop or some small gadget for your kitchen—you analyze the features and the style and the utility of the thing, and then you make a choice. But it turns out that there’s a psychological force that can influence what you’re willing to pay.

On this episode of Choiceology with Dan Heath, we examine a bias that affects how you perceive gains and losses, how you negotiate deals and the way you think about value.

The episode begins with legendary sports agent Leigh Steinberg. He describes his dramatic first attempt at negotiating a high-stakes contract for a client joining the National Football League. You can read more about his experiences in the sports world in his book The Agent.

You’ll hear an experiment based on Daniel Kahneman and Amos Tversky’s early studies that demonstrate the bias in real time.

And lawyer, mediator, and conflict resolution expert John Curtis explains how everyone—from people selling their homes to police informants going into witness protection—can fall prey to this psychological trap.

You can find out how to reduce the influence of this bias in your financial decisions in an article on schwab.com called “Weigh Anchor.”

Choiceology is an original podcast from Charles Schwab. For more on the series, visit schwab.com/podcast.

If you enjoy the show, please leave a ⭐⭐⭐⭐⭐ rating or review on Apple Podcasts.

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A Number in Mind

Choiceology with Katy Milkman