Anchoring
Anchoring happens when the first number a trader sees becomes a reference point. In prediction markets, this is often the opening price or an early probability. Even as new data arrives, traders may adjust around that starting point instead of fully reassessing the situation.
This effect is common early in a market’s life or during periods of low information. On platforms like Polymarket, Kalshi, Myriad, and Manifold, anchoring shows up when probabilities drift slowly away from an early value despite clear updates. In prediction markets data, this appears as delayed movement or resistance around a specific probability level.
Anchoring doesn’t stop markets from updating, but it can slow adjustment and create temporary mispricing until enough pressure builds to break the anchor.
Why It Matters
Anchoring can delay accurate price discovery. Recognizing it helps analysts interpret prediction markets data and understand why markets sometimes move more slowly than expected.
Why does anchoring occur in prediction markets?
It occurs because people prefer adjusting from a known reference rather than starting fresh. Early prices feel “reasonable,” even if they were based on little information. This psychological tendency carries into trading behavior, shaping prediction markets data until stronger signals overcome it.
How does anchoring affect forecast accuracy?
Anchoring can cause underreaction to new information. Probabilities may lag behind reality, especially when updates contradict the initial view. Over time, informed trading usually corrects the bias, but short-term prediction markets data may remain skewed.
What insights can analysts gain from detecting anchoring?
Analysts can identify markets that are slow to adjust, spot resistance levels where prices hesitate, and recognize early-stage bias. Comparing price movement speed after news helps determine whether anchoring is influencing prediction markets data.
Real-World Example
A new election market on Polymarket opens at 60% for one candidate based on early expectations. Even after several polls weaken that position, the market drifts down slowly rather than adjusting sharply, showing anchoring around the initial price.
Anchoring and FinFeedAPI
Studying anchoring requires tracking early prices and later adjustments. FinFeed's Prediction Markets API provides structured prediction markets data—opening probabilities, time-stamped updates, and historical paths—that analysts can use to detect anchoring effects and measure how quickly markets break away from early anchors.