Page 22 - Becoming a Better Negotiator

Price Anchoring
Many litigants resist making the first offer. Plaintiffs rely on their demand -- the amount that represents winning at trial (maybe more than that) -- and Defendants do not want to offer anything until the Plaintiff is more “realistic.” Research suggests that this may not be the best course of action. That research suggests that the first offer has a significant affect on the negotiations.
Anchoring bias is the tendency to give weight to the first number and is still true even when the number is random.
Studies show that there is an anchoring bias that can play a significant role in negotiations. Anchoring bias is the tendency to give weight to the first number and is still true when the number is random. How random?
In one famous study, participants saw the spin of a roulette wheel marked from 0 to 100. After seeing the roulette spin, they were asked if the percentage of African countries that were members of the United Nations was higher or lower than the number spun on the wheel. They were then asked to estimate the actual percentage. The number on the wheel had a significant impact on the answers. Participants who saw the wheel land on 10 estimated the actual percentage at 25%, on average, but those who saw 65 guessed 45%, on average. Those
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