Who blinks first? Making the first offer in negotiations

We are often reluctant to make the first move in a negotiation, intuitively believing that it’s better to let the other side show their hand first. But research shows that, in most scenarios, you gain a material advantage from making the first offer. In almost all cases this works because, whatever you propose, the outcome is likely to be closely anchored to the starting point. This is known as the “first offer effect.”

In almost all cases this works because, whatever you propose, the outcome is likely to be closely anchored to the starting point. This is known as the “first offer effect.”  

Three reasons the ‘first-offer effect’ works so well – and tips to incorporate this into your negotiation technique

1. Information reference point.

People anchor more towards an initial offer than to any objective value of the item – once they are given an anchor, they generate knowledge consistent with it, rather than search for other relevant information.
Tip: Make your initial offer ambitious but reasonable

2. Cultural universality.

The first-offer effect holds across cultures and power levels, even when the other side has an attractive alternative option they can pursue.
Tip: Look for common ground to identify mutual benefits

3. Multi-issue applicability.

The effect also generally holds when there are multiple issues to negotiate, even if your opponent dismisses your first offer in relation to one issue and moves to negotiate another one.
Tip: Be patient and respectful and resist the temptation to rush

Further reading 

Three dilemmas to help you test your negotiating skills 

Questions to ask as you prepare to negotiate a deal 

Negotiation is a relationship not a transaction 

The essential elements to successful negotiation and dispute resolution 

The six steps to managing conflict