The Negotiator Magazine

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The initial positions articulated by people when they negotiate significantly influence the final terms they achieve. When someone begins with a reasonable opening offer, their opponent begins to think he or she will do better than they initially imagined. They are emboldened. They raise their goal and articulate a less generous position than they might have expressed to take advantage of the other side's naivety. On the other hand, if they initially receive a less generous opening offer, they begin to doubt their preliminary assessment. They think that they will not be able to do as well as they originally hoped. As a result, they lower their expectation level and begin to think they will have to give the other party a better deal for that side than they hoped.

Individuals who use a cooperative negotiation style should be careful not to announce reasonable opening offers unless they are absolutely certain they are interacting with persons who share their philosophy and will respond in kind. If they have any doubts, they should always formulate initial positions that give them more bargaining room. They must remember that less generous offers tend to undermine opponent confidence, while more generous offers tend to embolden those parties.

To demonstrate the impact of anchoring, I give my students a fact pattern describing a typical motor vehicle accident. They all receive the identical fact information and are told they represent the defendant. They are told of the initial demand they have just received from the plaintiff lawyer and asked how much they think they will have to pay to resolve the matter. I vary only one factor. Half of the students are told they have received a $60,000 demand, while the other half are told they have received a $30,000 demand. Those facing a $60,000 demand indicate that they will have to pay more than those facing a $30,000 demand. In many cases, those facing the $60,000 demand indicate that they will have to pay more than $30,000 to settle the case.

I generally suggest that negotiators should begin with opening offers that are as far away from where they hope to end as they can - and which they can rationally defend. If they begin with wholly unrealistic positions, they lose credibility and undermine the likelihood they will achieve agreements. On the other hand, if they begin with positions which don't favor their own side, they place themselves at a distinct disadvantage.

One other reason for beginning with opening offers that favor one's own side concerns the use of "bracketing." Negotiators tend to move from their opening positions toward the center. If people can induce their opponents to articulate the opening position, they can respond with an initial offer that places their goal midway between the parties' opening positions. As the parties make reciprocal concessions, they can continue to use bracketing to keep their objective near the midpoint between their current positions. If they do this successfully, they can often achieve better deals than they could have obtained had they not begun with a position which placed their objective near the midpoint between the parties' opening offers.

III. Conclusion

Negotiators should always remember the importance of beneficial aspiration levels and the impact of anchoring. People who hope to achieve better deals tend to do so, while those with lower aspirations tend to generate less generous results. It thus behooves individuals preparing for bargaining interactions to establish high, but rationally defensible, goals. They should also appreciate the impact of anchoring. When they begin with high demands or low offers, they begin to undermine opponent confidence and induce those persons to question their preliminary assessments. On the other hand, when they begin with modest demands or overly generous offers, they embolden opponents and induce them to contemplate better deals than they preliminarily thought possible. If they can induce their opponents to articulate the first offer, they should use bracketing to keep their objective between the parties current positions. As the participants move toward the midpoint between their respective positions, this may enable them to achieve optimal results for their own side.


Charles B. Craver is the Freda H. Alverson Professor of Law at George Washington University. He is author of Effective Legal Negotiation and Settlement (5th ed. 2005 Lexis) and The Intelligent Negotiator (2005 Prima/Crown). He is coauthor of Alternative Dispute Resolution: The Advocate's Perspective (2nd ed. 2001 Lexis). Over the past thirty years, he has taught negotiating skills to over 75,000 lawyers and business people throughout the United States, and in Canada, Mexico, Puerto Rico, England, Germany, Austria, and the People's Republic of China. He can be reached at ccraver@law.gwu.edu

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October 2005