Anchoring is a behavioral bias in which the use of a psychological benchmark carries a disproportionately high weight in a market participant’s decision-making process. The concept is part of the field of behavioral finance, which studies how emotions and other extraneous factors influence economic choices. In the context of investing, one consequence of anchoring is that market participants with an anchoring bias tend to hold investments that have lost value because they have anchored their fair value estimate to the original price rather than to fundamentals. As a result, market participants assume greater risk by holding the investment in the hope the security will return to its purchase price. Market participants are often aware that their anchor is imperfect and attempt to make adjustments to reflect subsequent information and analysis. However, these adjustments often produce outcomes that reflect the bias of the original anchors.