Anchoring Effect: Why the First Number in a Negotiation Decides Everything

The anchoring effect is a well-documented psychological phenomenon: when people make decisions under uncertainty, they rely disproportionately on the first number mentioned – the "anchor" – even when that number is arbitrary or unreasonable. In salary negotiations, the anchoring effect is one of the most powerful tools you should know and use.

The Experiment Behind the Anchoring Effect

Psychologists Amos Tversky and Daniel Kahneman first described the anchoring effect in the 1970s.^[1] In experiments, participants were shown arbitrary numbers (e.g. generated by a spinning wheel of fortune) before being asked to estimate how many African countries are members of the UN. Even obviously random numbers systematically influenced the estimates.

In negotiation contexts, the effect is even stronger: the first number mentioned pulls all subsequent offers and counteroffers toward it. Research shows that the initial anchor in salary negotiations significantly influences the final outcome.^[2]

The Anchoring Effect in Salary Negotiations

Every salary negotiation has an anchor – the first number that lands on the table:

• If the employer names a number first: "We're offering €55,000" – your counteroffer will be influenced by that figure.
• If you name a number first: "I'm thinking €72,000 for this role" – the employer negotiates downward from that baseline.

Whoever sets the anchor has a structural advantage in the negotiation. That is the main reason experienced negotiators prefer to name a number first.

"In salary negotiations, the first number is the most important one. Those who wait for the employer to name it first give up control – and often pay the price."

How to Set the Anchor Strategically

1. Research thoroughly: Your anchor must be plausible and defensible.
2. Set the anchor above your target salary: Build in a concession zone. If your current salary is €65,000 and your target is €70,000, open with €75,000.
3. Name the number with confidence: Hesitation weakens the anchor. A confident "I'm looking for €78,000 for this role" lands much stronger than "…maybe somewhere around €75,000?"
4. Justify it immediately: Tie the anchor to market data, experience, or concrete achievements – this legitimizes it.

Countering the Employer's Anchor

If the employer names a number first and it falls well below your expectations, don't counter immediately – actively destabilize their anchor first:

• Don't accept or reject it outright: "That's significantly below what I had in mind based on my research."
• Set your own counter-anchor: Name your number in response – this shifts the negotiating field in your direction. Crucially, stick to the target figure you determined in advance and can justify well. Don't move your number down.
• Bring in market data: "Based on my research, the market median for this role is X – could you walk me through how your offer was determined?"

The Anchoring Effect in Raise Conversations

The same principle applies in internal raise discussions: whoever names a number first anchors the conversation. Instead of waiting for your manager to make an offer, say proactively: "I'm aiming for a 12% increase to €54,000, based on my performance and market trends." That is a far stronger starting point than "I'd like to earn more."

When Not to Anchor First

There are situations where it's better to let the employer name a number first:

• When you don't yet know the company's salary structure and your anchor might land too low
• When you know the company's budget is well above your expectations