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  • Alessandra Corrêa

To make or not to make the first offer in a negotiation?*

Atualizado: 7 de jul. de 2023

This is a topic that always sparks heated debate and has been the subject of numerous studies.

Some argue that making the first offer is not advantageous for two main reasons: The first is that when you make the first offer, you indirectly transmit a lot of information. The other side can infer the ZOPA - Zone of Possible Agreement - that you calculated and, as a result, the accuracy of your information after hearing your proposal. The second and most important point is that your offer could be significantly higher or lower than ZOPA. And both situations can be hazardous to your health.

If you are the seller and your calculation is significantly lower than the ZOPA, you run the risk of losing too much value because you have anchored the offer below the price the buyer is willing to pay. On the other hand, if your calculation is too high and exceeds ZOPA by a large margin, the other party may decide it is not worth starting negotiations, and you will lose a business opportunity.

There is also an intriguing emotional factor: According to a study conducted by Duke University researchers Ashleigh Shelby Rosette, Shirli Kopelman of the University of Michigan, and JeAnna Abbott of the University of Houston, those who make the first offer experience more anxiety throughout the negotiation process and, as a result, are less satisfied with the outcome.

With so many arguments against it, what do you say to those who argue that making the first offer is the best?

The use of anchoring is an important argument. The anchoring effect is very powerful and even negotiators. It affects even the most experienced people. Making the first offer anchors value and establishes the starting point for negotiations.

Another significant benefit of making the first offer stems from the same study mentioned above. It demonstrates that, despite experiencing more anxiety, people who made the first offer had better economic outcomes.

What is the end result?

The bottom line is that it is situational. It is worth making the first offer if you are confident in your information and know how to deal with anxiety in a process that already has an inherent stress load.

If you have doubts about the information you have and value your level of satisfaction with the outcome, it may be best to let the other side take the first step.

Use the following factors to prepare, regardless of your starting position: If the other person makes the first offer, try to minimize the anchoring effects. In terms of information, try to confirm what you already have and continue to look for new information throughout the negotiation process. Quality information, among other things, can help to counteract anchoring effects. Last but not least, learn to deal with the stress and anxiety that come with the territory.

By Alessandra P G Corrêa

*The text was first published in Portuguese on the Head Energy blog.

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