How to Master Anchoring & Improve Your Negotiation Skills
If you don’t know what anchoring is, I have a fun survey for you. Please only take the quiz if you don’t know what anchoring is, and only before reading the article.
Think about a chore on your to-do list but just haven’t had time to complete. Now, imagine I have a tool that can do it for you; you never have to worry about it again. It costs $500. Would you buy it? If not, what would your counteroffer be?
What I just described is a situation where I used anchoring to my advantage. While anchoring is an effective negotiation tactic, it derives from a grander tendency of human minds — we tend to build our decisions and next steps around the most recent information. When it comes to negotiation, it’s like exerting a psychological gravity, pulling your counterpart towards your way of thinking.
The implications of anchoring imply that negotiation is a human process. A human process doesn’t necessarily mean a logical one; i.e., it is limited by human tendencies cand can be influenced to drive the conversation and results to your favor. Recognizing the impact of anchoring is essential because it protects you in your decision-making process during negotiations. Furthermore, you can take action to mitigate the effects of anchoring on you and use it to your negotiation advantage.
The Effects of Anchoring
Anchoring happens all the time — we do it, see it, and fall victim to it (myself included), regardless of whether we know what it’s called. A prevalent example of this occurs when a store offers a sale on items. Many consumers think a $3,000 bag (yes, that bag in the quiz is $3,000) is too expensive. When it goes on sale for 20% off, though, some might jump at the opportunity to buy it even if it still unaffordable. Take a look at the illustrations of Scenario 1 and 2 below for a different view…