The first offer dilemma in negotiations – should you make the first offer? Few questions related to negotiation techniques and negotiation strategies have yielded more academic attention and debate among practitioners in negotiation research.
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anchoring effect
Anchoring is a cognitive bias that describes the common human tendency to rely too heavily on the first piece of information offered (the "anchor") when making decisions. During decision making, anchoring occurs when individuals use an initial piece of information to make subsequent judgments. Once an anchor is set, other judgments are made by adjusting away from that anchor, and there is a bias toward interpreting other information around the anchor. For example, the initial price offered for a used car sets the standard for the rest of the negotiations, so that prices lower than the initial price seem more reasonable even if they are still higher than what the car is really worth.
The following items are tagged anchoring effect
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Integrative Negotiation Examples: Effective Anchors as First Offers
People tend to irrationally fixate on the first number put forth in a negotiation—the anchor—no matter how arbitrary it may be.
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The Advantages of Bias at the Negotiation Table
What impact do cognitive biases have on bargaining scenarios? Work by negotiation researchers Russell B. Korobkin of UCLA and Chris P. Guthrie of Vanderbilt University suggests how to turn knowledge of four specific biases into tools of persuasion.
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Dealmaking and the Anchoring Effect in Negotiations
Question: I’m in a tough negotiation right now where the other side has made a very aggressive first offer. I know that I need to defuse his anchor, but I’m not sure how. What should I say and do?
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How to Create Value at the Negotiation Table: Strategies for Creating Win-Win Negotiations
While you might choose many processes for conducting your negotiations, we recommend the following three steps of a mutual-gains approach to negotiations:
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Example of the Anchoring Effect and How it Can Impact Your Negotiation
Goal setting affects performance. In a review of goal-setting research, negotiation scholars Deborah Zetik and Alice Stuhlmacher of DePaul University found that when negotiators set specific, challenging goals, they consistently outperform those who set lower or vague goals.
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The Anchoring Bias Can Get Talks off to a Strong Start
Should you make the first offer in a negotiation? Typically yes, abundant research on the anchoring bias suggests. What is anchoring in negotiation? In negotiations centered on price or another figure, the party who moves first typically benefits by “anchoring” the discussion that follows on her offer—even if the anchor is arbitrary. For example, the … Read More
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Top 10 Negotiation Skills You Must Learn to Succeed
Increasingly, business negotiators recognize that the most effective bargainers are skilled at both creating value and claiming value—that is, they both collaborate and compete. The following 10 negotiation skills will help you succeed at integrative negotiation.
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An Example of the Anchoring Effect – What to Share in Negotiation
The prospect of sharing information with a negotiating counterpart can be scary – it can fix your counterpart into a position at the negotiation table you didn’t intend (an example of the anchoring effect). Share too much, and the other side might conclude that you’re desperate to make a deal, any deal.
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Make the Most of Your Salary Negotiations
What salary negotiation skills can you use if a potential employer asks you about your past salary? If you earned a competitive wage, your concern may be whether the new employer can afford you.
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Break a Competitive Cycle with Win-Win Negotiation Strategies
Negotiators seeking to break through the mythical fixed-pie mindset can try the following three proven strategies, suggested by Max Bazerman for finding mutually beneficial tradeoffs.
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Price Anchoring 101
Opening offers have a strong effect in price negotiations. The first offer typically serves as an anchor that strongly influences the discussion that follows. In research documenting this anchoring effect, psychologists Daniel Kahneman and Amos Tversky found that even random numbers can have a dramatic impact on people’s subsequent judgments and decisions.
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Satisficing and Negotiation
It stands to reason that devoting less time to relatively unimportant choices should free you up for more meaningful pursuits and increase your overall satisfaction. But how does the concept of satisficing apply to your most important decisions and negotiations?
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Negotiation Advice: When to Make the First Offer in Negotiation
When or when not to make the first offer in negotiations is a question many expert negotiators ask themselves when approaching business negotiations, real estate transactions, or even interpersonal negotiations with friends and family. In this article drawn from negotiation research, we offer negotiating skills and negotiation tips for when, and when not, to make … Read More
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What’s Keeping You from Closing the Deal?
When talks stall, it’s tempting to jump to conclusions: “It’s purely a price gap.” “They’re being unreasonable.” “We’re not communicating well.” “We’re in a weak position.”
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Integrative Negotiation Examples: Making Wise Bets on the Future in Bargaining Scenarios
A town government and a private fuel-oil company have a standing contract that they have renewed for several years in a row. The contract is again up for renewal, and the town manager is under pressure from his constituents to reduce the city’s heating costs and avoid tax increases.
The city’s fuel-oil consumption has remained … Read More
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Tough Negotiation Tips from Jennifer Aniston?
Fans of the television show Friends got a treat last month when Netflix made all 236 episodes of the blockbuster hit available to stream online. At first glance actors Lisa Kudrow, Jennifer Aniston and the rest of the star-studded cast might not be your first pick to peg as formidable negotiators, but at the height … Read More
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The Enduring Power of Anchors
In past issues of Negotiation, we’ve reviewed the anchoring effect – the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching for data that confirms the anchor’s viability. This testing is likely to … Read More
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Anchors Away?
Adapted from “The Enduring Power of Anchors,” first published in the Negotiation newsletter, October 2006.
In the Negotiation newsletter, we have reviewed the anchoring effect—the tendency for negotiators to be overly influenced by the other side’s opening bid, however arbitrary. When your opponent makes an inappropriate bid on your house, you’re nonetheless likely to begin searching … Read More
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Making the first move
Adapted from “Should You Make the First Offer?” by Adam D. Galinsky (Professor, Northwestern University). First published in Negotiation Newsletter.
Whether negotiators are bidding on a firm, seeking agreement on a compensation package, or bargaining over a used car, someone has to make the first offer. Should it be you, or should you wait to … Read More
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Articles & Insights
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- Business Negotiations
- Conflict Resolution
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- Conflict and Negotiation Case Study: The Pitfalls of Negotiations Over Email
- Mediation and the Conflict Resolution Process
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- Crisis Negotiations: After the West Coast Ports Conflict, Damage Remains
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- Dealing with Difficult People
- Examples of Difficult Situations at Work: Consensus and Negotiated Agreements
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- Dealing with Difficult People: Coping with an Insulting Offer in Contract Negotiations
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- 15 Things You Need to Know About Environmental Dispute Resolution
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- Negotiation Case Studies: Google’s Approach to Dispute Resolution
- International Negotiation
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- How to Overcome Cultural Barriers in Negotiation
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- Top 10 International Business Negotiation Case Studies
- How to Negotiate with Difficult People: International Negotiation, and a Refusal to Communicate
- Leadership Skills
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- How to Negotiate in Cross-Cultural Situations
- Ethics in Business Negotiations and in Leadership: How Collusion Limits Value Creating Opportunities
- Advantages and Disadvantages of Leadership Styles: Uncovering Bias and Generating Mutual Gains
- Negotiations, Gender, and Status at the Bargaining Table
- Mediation
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- Why is Negotiation Important: Mediation in Transactional Negotiations
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- Undecided on Your Dispute Resolution Process? Combine Mediation and Arbitration with Med-Arb
- The Mediation Process and Dispute Resolution: Strategies for Overcoming Obstacles at the Bargaining Table
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- Negotiation Training
- Salary Negotiations
- Teaching Negotiation
- Teach Coalition Management in Multiparty Negotiations
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- What Are Our Students Actually Learning? Gauging Effectiveness in Teaching Negotiation
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- Win-Win Negotiations
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- What is a Win-Win Negotiation?
- The Importance of Negotiation for Female Negotiators: Women Should “Negotiate Hard”
- The Difficulty of Achieving a Win-Win Negotiation Outcome: Negotiations with Iran
