Is Anchoring Important? by Brian Buck
The other morning, I went for what seemed like my millionth pandemic walk, when I ran into my neighbor. We got to talking about our professions (well, probably more like loud talking, since we were at an exaggerated social distance). He runs a recovery clinic, and I run a negotiation consulting firm. As soon as he heard that I was a negotiator, he asked, “I’ve heard anchoring is the most important thing to do in a negotiation, right?” It got me to thinking: Is that the most important thing in a negotiation? In the parlance of negotiation, anchoring is the act of making a first proposal in hopes of creating a firm baseline from which the negotiation will happen. In terms of game theory, the player who proposes first will have the greatest advantage (think: Prisoner’s Dilemma), because the anchor will happen closer to the proposing party’s most optimistic position. If neither player makes a proposal, they both lose in terms of how long the negotiation will take and the ability to create value. In practice, making the first proposal, or anchoring, does give a distinct advantage, with one caveat: The anchor must be credible. Every negotiation will have its own definition of what’s credible. At a relationship level, it’s
It’s based on small gestures and shared accomplishments to create momentum and demonstrable trust. Deal rapport will help push the deal forward, as it provides a framework for relationship credibility during the negotiation. For a proposal to be credible, it must be market-relevant and address all of the issues at play. If you make a proposal that’s two times the market value, you run the risk of being viewed as greedy or out of touch. When
about the trust that both parties have in each other. If you don’t trust the other party — i.e., believe that they’re going to uphold their end of the bargain — then nothing they say will be credible. However, in many negotiations both parties may not know each other or even have a history of working together, yet deals do get done. In situations like these, the parties establish what I call deal rapport . This is where they build micro-trust throughout the negotiation in order to get a deal done.
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