Let’s Negotiate… But You Go First!

There’s a memorable scene in the movie Raiders of the Lost Ark, when Indiana Jones and his friend Sallah open the Well of the Souls and peer down:

Sallah: Indy, why does the floor move?

Indiana: Give me your torch.

[Indy takes the torch and drops it in.]Indiana: Snakes….. Why’d it have to be snakes?

Sallah: Asps… very dangerous. …..You go first.

While a negotiation may not be as poisonous as a snake pit, there is often a similar impulse to let the other party venture in first. Whether in contractual bargaining, informal settlement discussions, or formal mediations, the question arises: Who starts? Many parties instinctively push for the other side to make the opening proposal and then respond. That desire is perfectly understandable. By waiting for your counterpart to make the first offer, the thinking goes, you potentially gain valuable information about the other side’s position.

While intuitive, that common approach to negotiations may not recognize the potential power of a first offer. A variety of independent studies, backed by empirical data, have shown that the party making the first move in a negotiation often achieves a better outcome. A first offer (so long as it is not patently absurd) sets a marker that has a strong pull on the course of the negotiations that follow. The phenomenon is called “anchoring.”

Interestingly, at least one of those studies revealed that parties who open the negotiations, however, experience increased anxiety by doing so. That trepidation can potentially cause them to be less satisfied with the outcome, even if it is superior in economic terms. So the next time your client is agonizing over making the first move, perhaps you can alleviate their concerns by suggesting that it may pay off!