Never Split the Difference: Negotiating as if Your Life Depended on It

2. LET THE OTHER GUY GO FIRST . . . MOST OF
THE TIME.
Now, it’s clear that the benefits of anchoring emotions are
great when it comes to bending your counterpart’s reality.
But going first is not necessarily the best thing when it
comes to negotiating price.
When the famous film director Billy Wilder went to hire
the famous detective novelist Raymond Chandler to write
the 1944 classic Double Indemnity, Chandler was new to
Hollywood. But he came ready to negotiate, and in his
meeting with Wilder and the movie’s producer, Chandler
made the first salary offer: he bluffly demanded $150 per
week and warned Wilder that it might take him three weeks
to finish the project.
Wilder and the producer could barely stop from
laughing, because they had been planning to pay Chandler
$750 per week and they knew that movie scripts took
months to write. Lucky for Chandler, Wilder and the

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producer valued their relationship with Chandler more than
a few hundred dollars, so they took pity on him and called
an agent to represent Chandler in the negotiations.
Similarly, I had a student named Jerry who royally
screwed up his salary negotiation by going first (let me say
that this happened before he was my student).
In an interview at a New York financial firm, he
demanded $110,000, in large part because it represented a
30 percent raise. It was only after he started that he realized
that the firm had started everybody else in his program at
$125,000.
That’s why I suggest you let the other side anchor
monetary negotiations.
The real issue is that neither side has perfect information
going to the table. This often means you don’t know enough
to open with confidence. That’s especially true anytime you
don’t know the market value of what you are buying or
selling, like with Jerry or Chandler.
By letting them anchor you also might get lucky: I’ve
experienced many negotiations when the other party’s first
offer was higher than the closing figure I had in mind. If I’d
gone first they would have agreed and I would have left
with either the winner’s curse or buyer’s remorse, those gut-
wrenching feelings that you’ve overpaid or undersold.
That said, you’ve got to be careful when you let the
other guy anchor. You have to prepare yourself psychically
to withstand the first offer. If the other guy’s a pro, a shark,
he’s going to go for an extreme anchor in order to bend

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yo u r reality. Then, when they come back with a merely
absurd offer it will seem reasonable, just like an expensive
$400 iPhone seems reasonable after they mark it down from
a crazy $600.
The tendency to be anchored by extreme numbers is a
psychological quirk known as the “anchor and adjustment”
effect. Researchers have discovered that we tend to make
adjustments from our first reference points. For example,
most people glimpsing 8 × 7 × 6 × 5 × 4 × 3 × 2 × 1 estimate
that it yields a higher result than the same string in reverse
order. That’s because we focus on the first numbers and
extrapolate.
That’s not to say, “Never open.” Rules like that are easy
to remember, but, like most simplistic approaches, they are
not always good advice. If you’re dealing with a rookie
counterpart, you might be tempted to be the shark and throw
out an extreme anchor. Or if you really know the market
and you’re dealing with an equally informed pro, you might
offer a number just to make the negotiation go faster.
Here’s my personal advice on whether or not you want
to be the shark that eats a rookie counterpart. Just
remember, your reputation precedes you. I’ve run into
CEOs whose reputation was to always badly beat their
counterpart and pretty soon no one would deal with them.