Should you make the first offer in a negotiation? In most cases, yes, abundant research suggests. In single-issue negotiations centered on price or another figure, the party who moves first typically benefits by anchoring the discussion on her offer.
A new study by professor David D. Loschelder of Saarland University in Germany and his colleagues identifies an exception to this rule. When parties are negotiating multiple issues, a negotiator who identifies a so-called compatible issue when making the first offer loses the advantage of moving first. A compatible issue is one on which parties have the same preference, such as a recruiter and job candidate who both want the candidate to work in Chicago, not New York.
In one experiment, pairs of participants played CFOs negotiating the sale of a pharmaceutical plant from one company to the other. The participant who made the first offer came out ahead when the offer mentioned only a sale price for the plant.
However, when participants mentioned a compatible issue, namely the date on which the plant would be transferred, the first-offer advantage turned into a disadvantage. Why? Because those who learned that their preferences were compatible on this key issue sometimes took advantage of this information; they pretended they were actually at odds on the issue and used it to extract concessions. This was especially true for negotiators who naturally brought a “proself” (self-focused and competitive) rather than “prosocial” (cooperative and altruistic) attitude to the negotiation.
The results attest to the importance of gathering information prior to negotiating. Try to identify high-priority issues on which you and the other party share the same preferences and then exclude these issues from your first offer—and anchor with confidence.
Resource: “The First-Mover Disadvantage: The Folly of Revealing Compatible Preferences,” by David D. Loschelder, Roderick I. Swaab, Roman Trötschel, and Adam D. Galinsky. Psychological Science, 2014.