Should You Make the First Offer: What Anchoring Wins, and What It Costs Across a Market
Should you make the first offer? Every negotiation guide gives the same answer: yes, anchor high, whoever speaks first controls the range. That advice is correct, it is supported by published research, and it is half of what the research found.
The other half was measured separately, in a study almost nobody cites. It tracked what happens when the same tactic is used across a market of repeated deals rather than in a single transaction, and the result is uncomfortable for anyone who sells to the same people twice.
This article reports both, because the first half without the second is advice that works once.
The Effect Is Real, and It Is Documented
The foundational study is Galinsky and Mussweiler’s First Offers as Anchors, published in the Journal of Personality and Social Psychology in 2001.
Across three experiments, in both face-to-face and email negotiations, the finding was consistent: whichever party made the first offer — buyer or seller — obtained the better outcome. First offers were, in the paper’s own description, a strong predictor of final settlement prices.
That is the sentence the entire advice industry is built on, and it is accurate. The number you say first does not merely open the conversation; it shapes where the conversation lands.
This is not an abstract concern. The U.S. Bureau of Labor Statistics lists the core duty of wholesale and manufacturing sales representatives as, verbatim, to “negotiate prices and terms of sales and service agreements.” That is roughly 1,571,400 jobs in 2025, at a median of $76,460. A tactic that moves settlement prices moves real money across a very large number of conversations.
Should You Make the First Offer, According to the Original Study
Yes — with a condition the summaries drop.
Galinsky and Mussweiler did not only establish the effect. They established how to kill it, and that is the more useful half for anyone who is usually the one receiving the offer.
The first-offer advantage disappeared when the negotiator who did not make the offer deliberately focused on information inconsistent with what that offer implied. Each experiment tested a different focus:
| Experiment | What the receiving negotiator focused on | Result |
|---|---|---|
| 1 | The opponent’s alternatives to this deal | First-offer advantage disappeared |
| 2 | The opponent’s reservation price | First-offer advantage disappeared |
| 3 | Their own target | First-offer advantage disappeared |
Read that as a defensive instruction. When someone opens with a number, the anchor works by pulling your attention toward their figure. Deliberately redirecting attention — to what they would do without you, to the lowest they would actually accept, or to the number you walked in wanting — removes its force.
Three different redirections, three times the effect vanished. The anchor is powerful and it is not durable against a prepared counterparty.
The Study Nobody Quotes
Thirteen years later, a different team asked a question the original design could not answer: what happens when the same person uses this tactic repeatedly, with people who will meet them again?
Maaravi, Pazy and Ganzach published the answer in Judgment and Decision Making in 2014, under a title that states the conclusion: Winning a battle but losing the war.
Study 1 used 176 participants in dyads negotiating the same pharmaceutical plant scenario Galinsky used. Buyers were assigned to an anchoring-tactic group, a “do your best” control, or no instruction at all.
The anchoring buyers won. They made more extreme first offers and settled at roughly 19.9 million NIS, against about 21.5 million for both other groups. The tactic worked exactly as advertised.
Then the researchers asked the sellers something nobody asks in a one-shot study: would you negotiate with this person again?
Sellers who had faced an anchoring buyer scored 3.56 on willingness to deal again. Sellers in the other two groups scored around 4.2.
A path analysis traced the mechanism: the anchoring buyer’s win lowered the seller’s estimate of their own relative profit, which lowered satisfaction, which lowered willingness to return.
What a Market of Repeated Deals Showed
Study 2 is the one that should change behaviour.
Fifty-two full-time MBA students traded twelve electronic chips in a twenty-minute open market. Half were instructed to use the anchoring tactic. The researchers recorded 303 negotiation encounters.
| Outcome | Two anchoring negotiators | Two negotiators with no tactic |
|---|---|---|
| Impasse rate | 15.4% | 3.9% |
| Deals closed | 9.74 | 11.28 |
| Time per negotiation | ~46.5 seconds | ~33.9 seconds |
| Accumulated profit | ~470 | ~521 |
Anchoring negotiators reached impasse roughly four times as often, took longer per deal, closed fewer deals, and finished with less total profit than negotiators using no tactic at all.
One honest statistical note: the profit difference was only marginally significant (p = .065, one-tailed), as was the single-encounter advantage for anchoring buyers (p = .06). The impasse and deal-count differences are the robust findings. Anyone citing this study as proof that anchoring loses money is overstating it; what the data clearly shows is that it produces more failed negotiations and fewer completed ones.
The authors’ conclusion is stated plainly: “the deliberate use of an anchoring strategy exacerbates the competitive and adversarial nature of negotiation.”
Why the Cost Is Invisible in a Single Deal
The structure of the finding explains why the advice industry only has half of it.
Measure one negotiation and anchoring looks like a free win. The price moves in your favour and nothing visible is lost. Every piece of advice built on a single-transaction study will therefore recommend it, correctly, on the evidence available to it.
The cost only appears when you measure the next encounter: the counterparty who does not come back, the deal that ends in impasse, the extra minutes spent on a negotiation that fails anyway.
That is a measurement problem, not a disagreement between studies. Both results are real. They describe different time horizons.
Which means the right question is not whether anchoring works. It is how many times you expect to deal with this person.
Where This Leaves a Small Operator
For anyone running a business alone, the second study describes the more relevant world.
A large organisation negotiating with hundreds of suppliers can afford counterparties who do not return. A freelancer with six clients cannot — and for someone building without an existing network, every counterparty is also a potential route to the next one. And the economics of a returning customer are not sentimental — measured over 33 months, customers who arrive through an existing relationship show materially different margin and retention from customers acquired any other way.
The survival context sharpens it further. The SBA’s small business figures put average survival across cohorts from 1994 to 2022 at 67.7% after two years and 49.2% after five. In a world where half of businesses are gone within five years, a counterparty willing to deal with you again is not a nicety. It is a substantial fraction of the asset.
What to Do Instead of Choosing a Side
Five conclusions that follow from both studies rather than from one.
Count the expected encounters first. One-off transaction with a stranger, anchoring has documented upside and no measured cost. Ongoing relationship, the measured costs apply to you. This is also why the first ten sales tend to be conversations rather than transactions — early buyers are almost by definition repeat counterparties.
Anchor on substance, not on extremity. What the research tested was the deliberate tactic of an extreme opening. A well-reasoned first number is still a first number, and it still anchors — without the adversarial framing the authors identified as the mechanism of the damage.
Prepare the three defences before any negotiation where you receive the offer. Their alternatives to this deal. The lowest they would plausibly accept. Your own target, written down beforehand. Each one, separately, neutralised the anchor in a controlled experiment.
Treat an impasse as a cost, not a draw. The clearest finding in the second study is a near-fourfold impasse rate. A negotiation that fails costs the preparation, the time and the option — which is why pricing from a defensible basis rather than a tactical one survives more conversations.
Watch the second meeting, not the first. The damage was measured in willingness to return. If you want to know whether your approach is costing you, the signal is not the price you got — it is whether they come back.
What the Research Does Not Settle
Four limits, stated because the subject invites overclaiming in both directions.
These are experiments, not field data. Students and MBAs in scenarios and simulated markets. The mechanism is well identified; the magnitudes should not be read as what happens in your industry.
The profit finding is marginal. As noted, p = .065 one-tailed. The robust results are the impasse rate and the deal count. Treat anyone claiming anchoring definitively loses money as going beyond the evidence.
“Anchoring tactic” is a specific thing. The second study instructed participants to use an extreme opening as a deliberate strategy. It does not establish that making a reasonable first offer carries the same cost.
Culture and context are not controlled here. Study 1 ran at an Israeli business school; Study 2 used MBA students in a simulated market. Negotiation norms vary, and nothing here measures that variation.
Frequently Asked Questions
Should you make the first offer in a negotiation? In a one-off negotiation, the evidence favours yes: across three experiments, whichever party made the first offer obtained the better outcome, and first offers strongly predicted final settlement prices. In repeated dealings the calculation changes, because a separate study found the deliberate tactic produced roughly four times the impasse rate.
Does anchoring actually work? Yes, on price, in a single transaction. Anchoring buyers in one experiment settled at about 19.9 million NIS against 21.5 million for buyers given no tactic.
What is the downside of anchoring? Counterparties were measurably less willing to deal with the anchoring negotiator again — 3.56 versus roughly 4.2 on willingness to return. In a simulated market, pairs of anchoring negotiators reached impasse 15.4% of the time against 3.9% for pairs using no tactic, and closed fewer deals.
How do I defend against someone else’s anchor? Three focuses each removed the advantage in controlled experiments: thinking about the opponent’s alternatives to the deal, thinking about their reservation price, or focusing on your own target. Prepare at least one before the conversation.
Is it better to let the other side go first? The research does not support that as a general rule — the first-offer advantage was consistent. What it supports is preparing a specific counter-focus so that receiving the offer costs you nothing.
Does anchoring make you less money overall? Not proven. In the market simulation, anchoring negotiators accumulated less profit (about 470 versus 521), but that difference was only marginally significant. The clearly supported finding is more impasses and fewer closed deals.
Does this apply to freelance or client work? It applies most to any relationship you expect to repeat. The measured costs are concentrated in willingness to deal again and in failed negotiations, both of which matter more when your client list is short.
What counts as an “anchoring tactic” in these studies? A deliberately extreme opening offer used as a strategy. The research does not test, or condemn, making a reasonable first offer based on your actual valuation.
Conclusion
Should you make the first offer? On the evidence, yes — and the advice stops there only because the studies most people quote stop there.
Making the first offer moves the settlement. That is documented across three experiments. Using an extreme opening as a deliberate tactic also produces nearly four times the impasse rate, fewer completed deals, and counterparties who are measurably less willing to negotiate with you again. That is documented too, in a study that happened to ask about the second encounter.
Neither result cancels the other. They answer different questions, and which one applies to you depends on a fact only you know: whether this is the last time you will deal with this person.
For most people selling a service, it is not. And the tactic that wins the room is not automatically the one that wins the year.
Ready to go further? We’re building a course right here on the site that walks through exactly how this blog was built and monetized, step by step — from the first article to the first revenue. Keep an eye on future posts; we’ll share it as soon as it’s ready.
A Note from Lucas
I had read the first-offer advice dozens of times and never once seen the follow-up study, which is strange given that it uses the same scenario and sets out to test exactly what the original could not. The number that stopped me was the impasse rate — 15.4% against 3.9% — because a failed negotiation does not show up anywhere in the usual advice, and it costs you everything the deal would have been worth. What I think actually happened here is a measurement artifact that became a doctrine: single-transaction studies can only see single-transaction results, so the advice built on them is confidently incomplete. My recommendation is to stop treating this as a tactic question and start treating it as an arithmetic one — count how many times you expect to deal with this person, and let that decide.
About the Author
Lucas Palma is the founder and editor of Info Is The Key. He writes about online business, entrepreneurship, and the practical mechanics of building income independently, working from primary sources and official data rather than recycled advice.
Last Updated: October 2026 | Reading Time: 11 minutes
Editorial note: This article reports two peer-reviewed studies and U.S. government statistics accessed in October 2026, all linked below. Both studies are controlled experiments using student and MBA participants in scenarios and simulated markets, not field observations of commercial negotiation; mechanisms identified in such designs do not establish magnitudes in any particular industry. Where a reported difference was only marginally significant, that is stated in the text rather than omitted. Nothing here is negotiation, legal or financial advice.
Sources
- Galinsky, A. D., & Mussweiler, T. (2001). First Offers as Anchors: The Role of Perspective-Taking and Negotiator Focus. Journal of Personality and Social Psychology, 81(4), 657–669
- Maaravi, Y., Pazy, A., & Ganzach, Y. (2014). Winning a battle but losing the war: On the drawbacks of using the anchoring tactic in distributive negotiations. Judgment and Decision Making, 9(6), 548–557
- U.S. Bureau of Labor Statistics — Wholesale and Manufacturing Sales Representatives, Occupational Outlook Handbook
- U.S. Small Business Administration, Office of Advocacy — Frequently Asked Questions About Small Business, 2026
