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Negotiation Anchoring

An anchor is the first number on the table, and it does two jobs at once: it sets the reference point every subsequent number is judged against, and it caps the range the other side will defend. Both effects work against the person who states a figure first. Whatever you name becomes, in practice, your ceiling — the counterparty's job is now to move you down from it, not up to it. The second-order effect is worse than the cap. Human negotiators default to splitting the difference, which converts your anchor into an arithmetic input rather than a position. If you ask for the true value and they counter low, the midpoint lands below your number, and the midpoint is presented as fairness. The rational response is not to ask for what you want but to anchor above it, because the midpoint is the number you will actually receive. Studies of negotiation games have found this repeatedly: extreme-but-defensible anchors outperform reasonable ones by wide margins. Practical rules follow. Avoid naming a number at all where the market is opaque — invert the question and ask them for their range, which also discloses information you do not have. If you must name one, name it high and be able to justify it with structural logic (scope, comparables, value created) rather than with need (“I was hoping for”). And when you later want to re-anchor upward, attach the new number to a change in the facts — expanded scope, a higher level, a bigger mandate — never to a change of mind.