The Power of Anchoring and Making the First Offer in Negotiations

Anchoring, or making the first offer in negotiations, can provide a significant advantage due to the powerful psychological phenomenon it triggers. Studies show that the first offer serves as a reference point for subsequent discussions, influencing perceptions and decisions. By setting a solid anchor that passes the 'because test' - having a legitimate reason supported by objective criteria - negotiators can leverage this strategy effectively. However, being too aggressive with the anchor can backfire, leading to a loss of credibility and persuasive power. Therefore, it's crucial to use anchoring carefully to maximize its impact and achieve favorable negotiation outcomes.