The first offer dilemma in negotiations – should you make the first offer? Few questions related to negotiation techniques have yielded more academic attention and debate among practitioners in negotiation research.
One of the most common negotiation techniques: Don’t ever make the first offer, or risk “showing your cards” and perhaps unknowingly giving away some of the bargaining zone. Others provided experimental and real-world examples of negotiation evidence that making a first-offer will allows you to “anchor” the negotiation favorably (anchoring in negotiation), particularly if you have a good sense of the bargaining range (see also, zone of possible agreement or ZOPA) and (even better) your counterpart does not.
In a series of negotiation technique research studies, researchers Ashleigh Shelby Rosette of Duke University, Shirli Kopelman of the University of Michigan, and JeAnna Abbott of the University of Houston provide evidence that might reconcile these competing perspectives. For their research, they asked MBA students to negotiate a single-issue price deal and recorded who made the first offer, the amount of the offer, and the deal outcome.
Making First Offers, the Anchoring Effect in Negotiations, and Negotiation Success
The subjects then were asked questions about their emotional state, such as whether they felt anxious during negotiation scenarios and whether or not they were satisfied with the outcome. The negotiators who made the first offer felt more anxiety than those who did not – and, as a result, were less satisfied with their outcomes. Yet, backing up prior bargaining studies, those who made first offers did better in economic terms than those who did not.
Advantages of Using Anchoring in Negotiation
If you value only the economic outcome of your deal, make the first offer in order to anchor the negotiation in your favor. But if you value satisfaction with the negotiation process more than the outcome itself, you may want to avoid the stress and anxiety of making the first offer.
The authors also recommended finding a “personal antidote that would prevent feelings of anxiety from emerging altogether.” For example, “some negotiators may find it helpful to role-play making the first offer and repeat this behavior in a safe simulation setting until they feel comfortable enacting it in a real-world negotiation.”
What are your opinions on making the first offer? Let us know your negotiation techniques in the comments.
Originally published in 2012.