Sometimes the first few minutes at the negotiating table are like the first few minutes in the boxing ring: Both opponents often dance around, reluctant to put themselves out there first. Just as some boxers are reluctant to throw the first punch, negotiators are often reluctant to put the first offer on the table. They may be worried that they will telegraph their strategy, or perhaps that they will reveal some sort of vulnerability. Are they right? Is it better to make the first persuasive move or let your opponent do so?
According to social psychologists Adam Galinsky and Thomas Mussweiler, you’re far better off making the first offer in a negotiation rather than letting your counterpart make the first offer. In a series of experiments, the researchers found that regardless of the person’s role in the negotiation (e.g. buyer or seller), negotiators who were given instructions to make the first offer obtained a superior outcome. For example, in one experiment, when parties looking to buy a factory made the first offer, the sellers ultimately agreed to a price of $19.7 million. On the other hand, when parties looking to sell the same factory made the first offer, the buyers ultimately agreed to a price of $24.8 million.
The reason for this effect is that the negotiator who makes the initial offer “anchors” the other party onto his or her numbers. This means that even though the other party should ideally determine the value of the negotiated items independent of the numbers provided by the initial offer, they don’t. Instead, they anchor, as a starting point, on the initial numbers provided by their counterpart and insufficiently adjust away from those numbers when they continue the negotiation. So, an initial offer of $30 million might result in a settlement of approximately $25 million, whereas an initial offer of $15 million might result in a settlement of approximately $20 million. Keep in mind, though, that if one’s initial offer is ridiculously unrealistic, getting it out there on the table first won’t be of much help to you, as your opponents are unlikely to take you as a serious negotiating partner.
In sum, this research demonstrates that it’s most beneficial to make the initial offer. If you fail to do so and let your opponent throw that first punch, you may find yourself down and out within a few minutes of the opening bell.
Source: Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81, 657-669.
According to social psychologists Adam Galinsky and Thomas Mussweiler, you’re far better off making the first offer in a negotiation rather than letting your counterpart make the first offer. In a series of experiments, the researchers found that regardless of the person’s role in the negotiation (e.g. buyer or seller), negotiators who were given instructions to make the first offer obtained a superior outcome. For example, in one experiment, when parties looking to buy a factory made the first offer, the sellers ultimately agreed to a price of $19.7 million. On the other hand, when parties looking to sell the same factory made the first offer, the buyers ultimately agreed to a price of $24.8 million.
The reason for this effect is that the negotiator who makes the initial offer “anchors” the other party onto his or her numbers. This means that even though the other party should ideally determine the value of the negotiated items independent of the numbers provided by the initial offer, they don’t. Instead, they anchor, as a starting point, on the initial numbers provided by their counterpart and insufficiently adjust away from those numbers when they continue the negotiation. So, an initial offer of $30 million might result in a settlement of approximately $25 million, whereas an initial offer of $15 million might result in a settlement of approximately $20 million. Keep in mind, though, that if one’s initial offer is ridiculously unrealistic, getting it out there on the table first won’t be of much help to you, as your opponents are unlikely to take you as a serious negotiating partner.
In sum, this research demonstrates that it’s most beneficial to make the initial offer. If you fail to do so and let your opponent throw that first punch, you may find yourself down and out within a few minutes of the opening bell.
Source: Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81, 657-669.
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