In negotiation, the first number often carries disproportionate weight. While perhaps not always an absolute guarantee of victory, the concept of “anchoring bias” suggests it’s a powerful and frequently underestimated advantage. Anchoring, in essence, describes our well-documented human tendency to rely too heavily on the first piece of information offered (the “anchor”) when making subsequent decisions. The human brain, in its quest for efficiency, often latches onto that initial number and adjusts insufficiently from it. The brain’s adjustment occurs even when the anchor is arbitrary or irrelevant. This initial figure frequently frames the perceived zone of possible agreement, profoundly influencing the counter-offers and concessions that follow. The legal field, a constant arena of negotiation, is no stranger to the potent effects of anchoring.

In legal negotiations, a delayed response can be more than embarrassing; it can be a costly missed opportunity. Being proactive in establishing an anchor is key to avoiding that frustration, as the initial offer often acts as a potent psychological anchor, shaping how individuals perceive and process information throughout the negotiation.

Consider a common scenario in business litigation: the initial settlement demand or offer. Imagine a plaintiff’s attorney, after thorough case evaluation, believes a fair settlement value is around $500,000. However, understanding anchoring, they might strategically open negotiations with a demand of $950,000. Conversely, a defense attorney, also aiming for a $500,000 resolution, might counter-intuitively open with an offer of $150,000.

While these initial figures may seem far from the eventual target, they serve a crucial psychological purpose. The $950,000 demand, even if perceived as high, immediately frames the negotiation in a higher range. The first offer tends to establish a baseline, and all subsequent offers are evaluated in relation to this initial benchmark. Even if the recipient believes the initial offer is unreasonable or “out of line,” it still exerts a gravitational pull on the negotiation. Subsequent discussions, even if they bring the number down significantly, are often subconsciously tethered to this initial anchor. It becomes psychologically more challenging for the opposing side to dramatically pull the number below a certain threshold once that high anchor is set. Similarly, the lowball offer from the defense aims to drag the perceived acceptable range downwards. The negotiation then becomes a process of adjusting from these starting points. Research consistently shows that these adjustments are often insufficient, pulling the final agreed-upon number closer to the initial anchor than it might have been otherwise. This illustrates how a well-placed initial figure can powerfully shape the entire negotiation landscape, often dictating the perceived zone of possible agreement before substantive arguments are even fully exchanged. The party making the first offer often benefits from demonstrating a compelling analysis of the case’s strengths and weaknesses, and their preparedness to articulate the reasoning behind their offer can lend additional credibility to the anchor.

Nuances in Crafting Your Anchor: Precision and Range

The power of the first offer isn’t just about being first; it’s also about how that number is presented. Studies have shown that precise numerical first offers (e.g., $947,500 instead of $950,000) tend to be more effective anchors than rounder numbers. A precise number can signal that the offeror has carefully considered the value and is less likely to move significantly from their position. However, an overly aggressive first offer can risk derailing the negotiation if it causes the other side to question your credibility or the feasibility of an agreement.

A more sophisticated approach involves “range offers”. Research from Columbia University has highlighted “bolstering ranges” as particularly potent.^[i] For example, a seller asking $7,000–$7,500 for a car instead of a flat $7,000. This type of offer aggressively stretches the bounds of a single-figure offer while also conveying flexibility and accommodation. Buyers receiving such offers tend to make greater concessions, partly because the range suggests a more ambitious bottom line for the offeror and can appear more polite than a single aggressive figure. This allows the offeror to claim more value while potentially mitigating reputational damage from a very aggressive single-point offer. Generally, ranges of about 5% to 20% of the base figure appear to work best. A well-crafted first offer, therefore, subtly communicates strategic thinking, understanding of the issues, and negotiation style.

This isn’t just some abstract theory; I’ve experienced this firsthand in my own career, especially while handling large, multi-million-dollar settlements for large insurance companies. In those high-stakes legal negotiations, you quickly learn how critical anchoring is. If you don’t put that first number on the table, you can bet the other side will. And once their number is out there, it’s like that’s the new center of gravity for the whole discussion. Trying to pull the negotiation significantly away from their initial figure? Even with compelling arguments or strong evidence, overcoming that initial number is an uphill battle. Research shows all subsequent judgments are made by adjusting away from that initial anchor. That first anchor really does set the entire playing field.

Fortunately, in those situations, I always made it a point to try and build positive, professional relationships with the opposing counsel. I found that this focus on a good working relationship, combined with a solid understanding of how anchoring works, really helped close deals that felt fair and beneficial to everyone involved. It’s so important to remember that anchoring isn’t about trying to bully or coerce anyone; it’s much more about strategically framing the conversation from the outset. Honestly, when both sides have a sense of these psychological dynamics, you’d be surprised how often you can find collaborative solutions.

So, why does anchoring have such a strong pull on us? It comes down to a few interesting ways our brains are wired. First, there’s something called the “insufficient adjustment” phenomenon. This basically means that even if we suspect an initial number might be off, we tend not to adjust our estimates far enough away from it. It’s like that first number has a magnetic pull.

Second, that anchor triggers what psychologists call “selective accessibility”. This is a fancy way of saying that once an anchor is set, our brains start actively looking for information that confirms it, while often unintentionally downplaying anything that contradicts it. So, if a high number is thrown out there, we subconsciously search for reasons to justify it.

And lastly, especially when we’re facing uncertain or complex situations (which negotiations often are!), an anchor gives us a sense of cognitive ease. Anchors provide a starting point, a mental shortcut that simplifies the tough job of figuring out what something is worth or what a fair outcome looks like.