Anchor Away, Negotiators

In a negotiation, an “anchor” is the first offer made by each side. It could be a specific price, payment terms, or a bundle of equipment or services. It is called an anchor because it “anchors” the negotiation around a specific point. Much like a ship will drift around its anchor due to winds or tides, so will a negotiation drift around a first offer. Most of us are not even aware of anchors in our daily lives. Yet, anyone who’s shopped for a car or a house has been “anchored” by the window sticker on the car or the listing price on the house. We know the price on these items is rarely firm, and will often be adjusted based on our skill in handling the negotiation, the relative scarcity of the item, and how badly we need the item.