The anchor effect refers to a psychological phenomenon in which the first piece of information available - in this case the first price quoted for a product or service - is used as a reference point or "anchor" for all subsequent decisions and judgements.

For example, a retailer could initially advertise a product as "originally 100 euros, now available for 70 euros". In this case, the price of €100 serves as an anchor that establishes the perceived value of the product in the minds of consumers. The reduced price of 70 euros then appears to be a good offer compared to the anchor price, even if the product was never sold at the higher price.