Who blinks first? Making the first offer in negotiations

Increase your chances of negotiation success – not by holding your cards close to your chest but by making the first offer. Jennifer Jordan explains how to use this tactic to your advantage.

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

Jennifer Jordan

Professor of Leadership and Organizational Behavior

Jennifer Jordan is a social psychologist and Professor of Leadership and Organizational Behavior at IMD. Jennifer’s teaching, research, and consulting focus on the areas of digital leadership, ethics, influence, and power. She has received specialized training and certifications in lie and truthfulness detection, as well as in conflict resolution within organizations. She is Program Director of the Women on Boards and the Leadership Essentials program, and co-Director of the Leading Digital Execution program.