Do not always justify your first offer (anchor)

Many negotiators think that presenting the first offer has to be backed up with a carefully reasoned argument to be more compelling and persuasive. Some of you might think that adding even a weak justification to a request can have a huge positive effect on the probability that your counterpart will accept it. As the person making the first offer, you are dropping an “anchor” that probably will form the basis of discussion. And if you justify your offer, you might think that the anchor is even more powerful.

‍

Research, however, indicates the opposite. When a negotiator justifies his initial offer, his counterpart is likely to respond in a negative way, because he feels his negotiating freedom is limited. He might feel pushed to act in a certain way. In situations where it is easy for the opposite party to generate counterarguments, they tend to be less receptive to the negotiators initial offer (anchor).

Example: Maaravi et al. conducted an experiment with participants engaged in online-purchasing negotiations. In the experiment, a seller presented participants with an opening offer of 190 k USD for an apartment, sometimes accompanied by a justifying argument (recent renovation, presence of an elevator, etc.). Buyers had to make a counteroffer. Here’s what happened: when the offer was accompanied by a justification and buyers had easy access to the same facts, they made significantly tougher counteroffers (the buyer remind herself that the apartment lacks balcony, parking, washing machine, etc.) . The seller’s persuasion efforts have been more successful in cases where the buyers had to work harder to remember the seller’s arguments.

‍

‍

This has specific implications for your negotiation:

Check beforehand if counter-arguments are easy accessible for your counterpart. If that’s the case, be aware that your justification efforts might backfire. Your counterpart may be more receptive to novel information you might provide, i.e. newly lowered price or confidential data.

Search for contradictions and discrepancies. If your counterpart is making the first offer, considering the opposite, search for information that might be inconsistent and present it as a counter-argument. This helps you overcome the anchoring effect.

Avoid extremes. Make a high demand, near to your optimum, but take care not to offend or stress your counterpart. Otherwise it is likely that he/she will search for counter-arguments.

Take the risk. Making the initial offer and dropping the anchor might be risky. Nevertheless in many contexts, being in the position of those who drop the first offer will help you doing better than if you try to overcome your counterpart’s anchor.

Stand the silence. Most people have huge difficulties in standing silence. But this can be a powerful tool for persuading your counterpart. Just drop the anchor, be silent and watch your counterpart’s reaction.

‍