First Offers as Anchors: Why the Opening Number Sets the Price, and How to Break Its Pull

By Noam Shemla · The Studies

TL;DR In three negotiation experiments, whoever made the first offer, buyer or seller, came away with the better price, and the opening number was a strong predictor of where the deal closed. In the control groups the correlation between first offer and final price ran from .80 to .93. But the pull could be broken: when the person receiving the offer was asked to think about information that pointed the other way, the advantage of going first disappeared.

• Paper: Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: the role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657–669.
• Participants: MBA students in negotiation classes.
• Task: A single-issue price negotiation between a buyer and a seller over the sale of a pharmaceutical plant, face to face and by email.
• Design: Three experiments. In each, some negotiators were asked to focus on one piece of information before bargaining; a control group was not.
• The three focuses: The other side’s alternatives to the deal (Experiment 1), the other side’s walk-away price (Experiment 2), and one’s own target (Experiment 3).
• Outcome: The final settlement price, and how closely it tracked the first offer.
• Access: Subscription-only. The design and findings here come from the abstract, from the lead author’s own review of the field, and from a meta-analysis that extracted the correlations from the paper.

Every negotiation has an opening number, and someone has to say it. Folk wisdom says to let the other side go first, so that you learn something before committing yourself. This paper, by Adam Galinsky and Thomas Mussweiler, is one of the most cited papers behind the opposite advice, and it offers a precise account of why the opening number is so powerful.1

Why a number sticks

The authors built on a model of anchoring from Mussweiler's own earlier research, called selective accessibility. When you hear a number, you do not simply adjust away from it. You start testing whether it could be right, and the easiest evidence to find is the evidence that fits. A buyer who hears a high asking price starts recalling the reasons the thing might be worth that much. Those reasons are now the most available thoughts in the room, and the counteroffer and final price are built from them.2

That model makes a prediction a simple "people are lazy about adjusting" story does not: if you can get the receiver to call up the thoughts that do not fit the number, the anchor should lose its grip.

What they found

Across all three experiments, whichever party made the first offer, the buyer or the seller, obtained the better outcome, and the first offer was a strong predictor of the final price.

How strong is visible in the correlations. A meta-analysis published in 2006 by Dan Orr and Chris Guthrie extracted them from the paper, one per experiment for the control groups and one for each focus condition.3 In the control groups the correlation between first offer and final price was .93, .80 and .85. With a focus that pointed away from the offer, it fell to .30, .40 and .34.

A correlation is easier to feel as the share of variation it accounts for, which is its square. At .93, the first offer accounts for 86% of the variation in final prices; at .80 and .85, for 64% and 72%. The lead author's later review summed this up as over half the variance in outcomes explained by first offers alone.

The intervals in the figure are ours. With samples this small, a single correlation is uncertain, and the standard way to express that uncertainty is to move the correlation onto a scale where its sampling error is roughly the same size everywhere, build the interval there, and move back.

Which thoughts break the anchor, and which do not

The three focus conditions have one thing in common: each points the receiver at information that contradicts the implication of the offer. A seller's high opening implies the plant is worth a lot. Thinking about what the seller could get elsewhere, where their real limit lies, or what you yourself are aiming for, all bring to mind numbers other than the one on the table.

The lead author's review adds the other half of the pattern: focusing on information that is consistent with the offer, such as the other side's own target or your own alternatives, did not protect anyone.2

What the person receiving the first offer was thinking about

Has it held up?

The broad finding has. Orr and Guthrie pooled every simulated negotiation they could find, 16 articles and 19 results, and found a correlation of .497 between the opening anchor and the final outcome. No study in their sample reported less than .30. By their file-drawer test, it would take 113 unpublished studies showing no effect to erase the result.3

The same analysis supports the paper's second message. Anchors were strongest when the opening number was the only salient figure available, and weaker when the receiver knew something about the other side's position. Negotiators with professional experience were anchored too, but less.

Other research has drawn limits the 2001 paper did not test. An opening that is extreme enough can be read as an insult, or as a sign that no deal is possible, and end the conversation instead of anchoring it.2

What this study cannot tell you

• The samples are small. Each condition had 16 to 20 negotiations, which is why the intervals above are so wide.
• The negotiators were MBA students in a classroom simulation with a single issue, price. Real negotiations usually involve more issues and more information, and the meta-analysis shows that information weakens anchors.
• A correlation is not a mechanism. As Orr and Guthrie point out, other things can drive both the opening number and the final price, not least how strong each side's position was.
• We could not read the paper. It is subscription-only. Its design and headline findings here come from its abstract and from the lead author's review; its correlations come from the meta-analysis that extracted them.

What a speaker can take from it

A negotiation is a conversation, and the first number spoken in it does a lot of the work. Two habits follow from this study, and both are things you say out loud.

If you can, say the number first. It shapes what the other person thinks about while they decide how to respond. Say it plainly, and give the reason for it in the same breath, so that the reasons that fit it are the ones they hear. That last part is our extrapolation from the mechanism, not something the paper tested.

If you hear a number first, answer with what does not fit it. Before you counter, say your own target out loud, or name the other side's alternatives. Thinking about exactly these things cancelled the anchor in every experiment here, and saying them out loud is the surest way to make sure you actually do. Rehearse the sentence beforehand; under pressure, the words that come most easily are the ones the other side just gave you.

This article summarises a subscription-only paper. The design and findings come from its abstract and from Oesch & Galinsky’s review; the correlations and sample sizes are the paper’s as extracted by Orr & Guthrie (2006). The confidence intervals for the paper’s correlations are ours.

Measured

• First offers and final settlement prices in simulated negotiations
• In the meta-analysis, correlations between opening anchors and outcomes across 19 results

Inferred, not measured

• Selective accessibility as the mechanism: the authors’ account, supported by the pattern of which focuses worked
• The mapping of the third focus condition to the negotiator’s own target, where the meta-analysis’s table says otherwise

References

1. Galinsky, A. D., & Mussweiler, T. (2001). First offers as anchors: the role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657–669. https://doi.org/10.1037/0022-3514.81.4.657
2. Oesch, J. M., & Galinsky, A. D. (2003). First offers in negotiations: determinants and effects. SSRN working paper 399722. https://doi.org/10.2139/ssrn.399722
3. Orr, D., & Guthrie, C. (2006). Anchoring, information, expertise, and negotiation: new insights from meta-analysis. Ohio State Journal on Dispute Resolution, 21(3), 597–628. https://hdl.handle.net/1811/77238