Make the First Offer During a Negotiation

Always make the first offer:

When I poll executives, more than three quarters believe that it’s usually best not to make the first offer...There’s only one problem with this assumption: it’s wrong. One thorough analysis of negotiation experiments showed that every dollar higher in the first offer translates into about 50 cents more in the final agreement. (Grant, 2013).

Why?

First, your counterpart will focus on the best qualities about your offer.

...a high list price directed real estate agents’ attention to the house’s positive features (such as spacious rooms or a new roof) while pushing negative features (such as a small yard or an old furnace) to the back recesses of their minds. (Galinsky, 2004)

Negotiating a job offer? Request a high salary to orient this employer to look for your best qualities that justify this cost.

Second, you trigger an anchoring effect (see Epley & Gilovich, 2006).

Most employers are considering a range of salaries, such as $70k - $95k. Your requested salary ($100k) will pull them to the higher end of their range ($95k).

Without an anchor, your salary would settle near the midpoint of their range — in this case $82.5k (which is $12.5k less than you would have received).

Caveats

• Schmooze First. Don’t underestimate schmoozing: "schmoozing greases the wheels of sociality and commerce, allowing relationships and deals to develop despite the friction involved in negotiations. (Morris, Nadler, Kurtzberg, & Thompson, 2002, p. 99). Personal information (e.g., what’s happening in your life) is particularly effective (Worthy, Albert, & Gay, 1969).

• Epley, N., & Gilovich, T. (2006). The anchoring-and-adjustment heuristic: Why the adjustments are insufficient. Psychological science, 17(4), 311-318.
• Galinsky, A. D. (2004). When to make the first offer in negotiations. Harvard Business School Working Knowledge.
• Morris, M., Nadler, J., Kurtzberg, T., & Thompson, L. (2002). Schmooze or lose: Social friction and lubrication in e-mail negotiations. Group Dynamics: Theory, Research, and Practice, 6(1), 89.
• Worthy, M., Gary, A. L., & Kahn, G. M. (1969). Self-disclosure as an exchange process. Journal of personality and social psychology, 13(1), 59.