Say what you can do: What Counter Proposals Can Do For Negotiations

Have you ever wondered why the person who makes the first proposal in negotiation often ends up with the better deal? It turns out, there’s an effect called “anchoring” that takes place when someone makes the first offer. Research conducted by Wolfram E. Lipp, Remigiusz Smolinski, and Peter Kesting suggests that counterproposals can also create a similar anchoring effect – but with a catch. Let's dive into what it means to “counter propose and anchor credibly”!

The study found that when a counter-proposal is made for the same item, it creates an anchoring zone – meaning both parties are more likely to settle on a price somewhere between their original offers. While this is helpful for creating compromise and getting closer to a deal, too much aggression can have negative effects. When one party's offer is too far away from the other's, the value of the negotiation decreases for both parties. This could mean they end up settling on deals they're less happy with or even having to abandon negotiations altogether.

Counter-propose, credibly, to create an anchoring zone

The researchers suggest that while counter-proposals are important in order to reach mutual agreement, they should be carefully crafted so as not to be overly aggressive and decrease subjective value for all parties involved. Being aware of this effect also allows negotiators to take advantage of their positioning – if you can't go first, your counter-proposal will still help create an anchoring zone!

It pays off to be strategic about how you craft your proposals and counter-proposals in any negotiation situation; doing so ensures everyone gets closer to achieving mutual satisfaction and success in reaching a fair agreement!

Look, we're believers in the power of going first in negotiation. That first anchoring effect is slightly stronger than the counter-proposing anchoring effect. Exhibit A being the fact that if the counter is too far off from the first position, it damages credibility. But if you have a strong counter and are able to re-anchor from your perspective, you're much better off.

So to wrap things up, Wolfram E. Lipp, Remigiusz Smolinski and Peter Kesting suggest that counter-proposals can also create an anchoring effect - albeit smaller - than the original proposal. However, it is important that these counters not be too aggressive or else they may have a negative impact on subjective value for both parties involved in the negotiation. Knowing this information allows negotiators to make sure their counters are strategically crafted so as not to reduce their chances of getting what they want out of a deal! So if you can't go first - don't worry - just remember to counter propose and anchor credibly!

Aligned DEMYSTIFIES what successful negotiation looks like