In dealmaking, a certain question often looms large: Should you or shouldn’t you make the first offer?
Traditionally, negotiation experts advised us to sit tight and wait for the other side to float the first number. This advice is grounded in the fact that the other party’s offer may shed light on his goals and alternatives and better equip you to meet them. Yet more recent negotiation research on the anchoring effect has added nuance to the conventional wisdom about when to make the first offer in negotiation.
When engaged in claiming value in negotiation, our perceptions of a particular offer’s value are significantly influenced by any relevant number, or anchor, that is introduced. Especially when ambiguity and uncertainty are high, the first offer that a party puts forth will have a strong anchoring effect on the negotiation that follows. Even when we know a particular anchor should not affect our judgment, we have difficulty resisting its influence.
