The open is an important aspect of any negotiation, and it is wise to spend preparation time analyzing and considering your own preferred strategy as well as that of your adversary.
By Joan Stearns Johnsen | First published on the American Bar Association | Nov. 4, 2020
The opening move in any negotiation is all important because studies show a correlation between the initial bid/ask and the ultimate result of the negotiation. Negotiation, however, is not baking a cake. Following the same recipe time after time in each negotiation is a poor strategy. It discourages critical analysis of each unique set of dynamics. This is also true with regard to who should make the first move in a negotiation. Different negotiators approach negotiation differently. Some believe strongly in starting outrageously high while others abhor the game playing and prefer to cut to the chase. Some negotiators have done their homework and others prefer to shoot from the hip. And in spite of all of the permutations—all of the possible dynamics in each negotiation, there are still many who discuss the all-important open by saying “I always.” As a mediator, I have had cases where this question of who opens first devolves into a full mediation within the mediation. Often each negotiator is wed to their personal and intractable “always or never” approach.
This phrase “I always” may be followed by “open first, because I like to anchor the other side.” Or “I always open last because I want to make the other side go first and learn from what they do.” Both of these objectives are good. The problem is the lack of flexibility—the “always” mentality. Negotiation theory based on psychology teaches us that “I always” is never the right answer to a negotiation dilemma. The correct answer is “it depends.”
There is an analysis to follow in determining whether you would like to open or would prefer to wait to hear the other side’s open. The threshold question is how certain are you as to the value of the case? This will likely depend on the extent of available objective data, norms, and standards regarding the matter you are resolving. If you have reason to believe you have a very good sense of the value of the case, and this requires a high degree of objectivity, then going first will allow you to anchor the other side. Anchoring is a psychological principle. Studies find that random numbers influence our thinking. If you had come into the negotiation as the defense with authority in a range of $300,000 to $500,000 and the plaintiff opened with a demand of $1 million, your initial reaction might be that the case could be settled, but that you might have to go to the top of your range. You might have planned on opening at $50,000 or $75,000 and might rethink that open in light of the plaintiff’s first demand. It might get you to open at least at $75,000 or even adjust to $100,000. If on the other hand the plaintiff had opened at $600,000, you might be more comfortable with $50,000 or at most $75,000. You would definitely not go
above what you had planned. You also might be thinking that you had a better chance at settling at $300,000. That higher, more optimistic open has the effect of anchoring you and its effect can be powerful.
If on the other hand, the settlement value of the matter is fairly uncertain, then it is not wise to make the first move. You will never do better than your open. If you guess incorrectly, you will have cut off your opportunity for a better deal—unless you renege and try to start over, a move that often leads to a loss of credibility.
Who goes first is followed by other questions: What strategy can I use if the other party refuses to go first? And then, if I must be the one to open, what should I say?
The open is an important aspect of any negotiation, and it is wise to spend preparation time analyzing and considering your own preferred strategy as well as that of your adversary. It is an important decision and should be regarded as such.