Do not be a wimp: The Anchoring Principle, Focalism

Here is why you should always make the first offer

Contrary to popular belief, common sense and common wisdom, people who make the opening offer in a negotiation have the upper hand. This is a corollary of this psychological heuristic known as “Anchoring” or “Focalism”, a cognitive bias describing the common human tendency to rely too heavily on the first piece of information offered [The Anchor] when making decisions. In any negotiation, whoever makes the first offer establishes the range of possible variation from that anchor. If you start with high expectations, the “adverse” party may adjust down slightly. For any skilled negotiator, this is a stronger position than starting low and trying to negotiate uphill.

In a negotiation, whoever makes the first offer drops an anchor on the table. It might be a ridiculous opening offer,  nevertheless, unconsciously, an anchor has been dropped on the table influencing the overall negotiation process. An aggressive opening offer makes people consider the seriousness of your approach, the positive qualities and value of your proposal. On the other hand, a low opening offer or proposal makes people dubious and reconsider twice what might go wrong or be wrong on your side of the negotiation table.

Many negotiators fear that an aggressive first offer will scare or annoy the other side; this is a common false and exaggerated belief. Act as a winner, not a “Wimp” and “Shoot to Kill”. Start the negotiation with a high but not overly aggressive offer. Rather than explicitly ask for it, introduce a relevant number or offer and, wait! Stop talking and wait; from this point on, whoever talks first loses.

The next time you enter a negotiation, put your offer on the table first. Do not give yourself away. Just do not be shy and learn to keep your mouth shut!

JMD

jmdlive@live.ca

Michel Ouellette JMD [jmdlive.com] is a Public Affairs & Communications Strategist, a miracle worker for entrepreneurs, executives and social innovators.