Going First Isn’t a Loss: The Power of Anchoring in Negotiations

In negotiation, many people believe that the first to name a price or term risks losing leverage, leaving them at a disadvantage. But going first isn’t a weakness—in fact, it can be a powerful strategy. Research consistently shows that setting the initial offer, or “anchor,” frames the entire negotiation, influencing the range of outcomes and subtly shaping the other party’s expectations.

By understanding the science of anchoring, you can turn going first into a strategic advantage.

Why Going First Can Be an Advantage

While there are situations where holding back is useful, going first often provides significant advantages. Here’s why:

1. Sets the Reference Point

The concept of anchoring was first demonstrated in a groundbreaking 1974 study by Amos Tversky and Daniel Kahneman. In their experiment, participants estimated the percentage of African countries in the United Nations after observing a random number generated by a rigged roulette wheel. Those exposed to a low anchor (10) gave lower estimates than those exposed to a high anchor (65), highlighting how even arbitrary anchors can sway judgments.

In negotiations, the first offer acts as a similar reference point, anchoring the discussion. Subsequent offers are often influenced by this initial figure, even if the anchor is arbitrary. By controlling the anchor, you effectively guide the conversation toward your desired range of outcomes.

2. Shows Confidence and Control

Making the first offer signals confidence and preparation, positioning you as someone who knows the value of their proposal. Research on simulated negotiations confirms that parties who make the first offer often achieve more favorable outcomes. By setting the anchor, you establish the tone and take control of the negotiation framework.

Confidence also has a psychological effect. A strong anchor suggests authority and expertise, reinforcing your position as someone who knows what they’re doing.

3. Frames the Negotiation Around Your Terms

Anchoring doesn’t just influence the monetary range of a negotiation. It also frames the terms of the discussion. For example, anchoring with specific timelines or deliverables can shift the focus to priorities that benefit you.

A meta-analysis of negotiation studies underscores that the party making the first move has a strategic advantage. Anchoring directs the conversation to revolve around your terms, increasing the likelihood that the final agreement aligns with your goals.

How to Use Anchoring Effectively in Negotiations

To make anchoring work for you, preparation and strategic thinking are key. Here’s how:

1. Research and Prepare a Strong Anchor

Anchors are most effective when they’re credible and supported by data. Before setting your anchor, gather relevant information to ensure it aligns with market standards or comparable examples. For monetary anchors, justify your figure with industry benchmarks or case studies. For non-monetary terms, frame your anchor with logic to make it harder to dismiss.

Tversky and Kahneman’s research shows that anchors don’t need to be perfect, but they must feel plausible to influence the other party effectively.

2. Use Anchors That Align With Your Goals

Your anchor should be ambitious but realistic. For instance, if you’re negotiating a deal, set an initial price above your minimum acceptable rate to leave room for compromise while steering the outcome toward your target.

The other party’s perception of fairness also matters. Studies, such as those by Furnham and Schindler, suggest that people vary in their susceptibility to anchoring, but presenting a well-reasoned anchor increases the likelihood of it being accepted as a starting point.

3. Stay Flexible After Setting the Anchor

Anchoring isn’t about being rigid it’s about guiding the conversation. Once you’ve set the anchor, remain open to adjustments. Flexibility fosters collaboration and goodwill, making it easier to arrive at a mutually beneficial agreement.

Even when aware of the anchoring effect, people find it challenging to completely avoid its influence, according to research on debiasing. This persistence underscores why flexibility is crucial for maintaining trust and progress.

Examples of Anchoring in Action

Anchoring can be applied in diverse negotiation scenarios. Here are two examples:

Example 1: Anchoring with a High Initial Offer

A consultant pitching services to a client opens with a high initial price, presenting it as a premium solution supported by data and a portfolio of results. Research shows that the client’s final offer will likely land closer to this anchor than if they had named the first figure.

Example 2: Anchoring with Non-Monetary Terms

A project manager negotiating for additional resources anchors with a detailed proposal outlining ambitious timelines and deliverables. This shifts the focus to the project’s value, making it easier to secure agreement on the requested resources.

When Not to Use Anchoring

Although anchoring is powerful, it isn’t always appropriate. In highly collaborative or trust-based negotiations, an aggressive anchor might harm long-term relationships. Research emphasizes the importance of assessing the negotiation’s context and goals before deciding on an anchoring strategy.

Harnessing the Power of Anchoring

Going first in a negotiation isn’t a risk it’s an opportunity. Science shows that anchors strongly influence decision-making, shaping the range of possible outcomes. By researching thoroughly, setting credible anchors, and remaining flexible, you can use this cognitive bias to your advantage.

The next time you’re at the table, consider going first. With the right anchor, you’re not just negotiating you’re leading the conversation and setting the stage for success.