The negotiations going on between the United States and China here at the outset of 2020 serve as a brilliant example of the power of anchoring in negotiations. President Donald Trump, while a polarizing personality, is incredibly good at using anchors to advance his positions and goals. His tactics are fascinating to watch and to learn from.
First, let’s make sure we all know what we’re talking about when referring to “anchoring.”
Anchoring is the name given to the human tendency to give far too much weight or importance to the first option suggested in a negotiation. If this tendency isn’t understood and considered carefully, the second party may become unknowingly “tied to” the anchor as it was proposed rather than thinking beyond it to other possibilities or options
Anchoring is a well-known cognitive bias that skilled negotiators use to their advantage. Commonly, the anchor that is proposed will be an extreme version of the proposing party’s real wishes. It is proposed initially because the negotiator knows that the give and take of the negotiation process will whittle away at it, but that the end result will be close to their actual goal.
Anchoring can be observed in any situation where bartering is common, whether it happens in a South American marketplace or in a car dealership showroom.
As was mentioned, President Trump effectively and regularly “drops” anchors in debates, negotiations like the one going on with China, and even in press conferences and Q & A sessions. Why are anchors so effective? Because they tend to draw people’s attention toward the things desired by the person who proposes them.
In a recent episode of the Negotiations Ninja podcast, Allan Tsang spoke about the negotiations President Trump is engaged in with China and highlighted some very interesting points.
“There is a time for extreme anchoring, which is what he (President Trump) did with China and that’s what he does with other countries… He’s got a little bit of that ‘crazy’ on his side, where if you are a leader in another country, you have to ask, ‘Is he going to execute on that crazy?’ Like, ‘We are going to bomb you like you have never seen before, Korea.’ I mean, you say stuff like that, most other Presidents will never say that. But he acts the way he acts and when he says it you have to take a minute and pause, and you go, ‘Wait a minute. Is this the real Trump or do we call his bluff or not?’ Do you really want to call his bluff and see what happens when we get flattened? So, this extreme anchoring works, but there’s a plus and minus with extreme anchoring. If you constantly do it and then you constantly walk it back, then people don’t trust your extreme anchors. So, the one thing that he does well is that he’s creating this impasse. There’s one thing that China does well, if you look at it from a Chinese point of view, they kind of called him on it.”
Pay attention to this is a lesson in anchoring from an international level negotiation
President Trump typically uses anchoring quite effectively, but in the current negotiations with China, it didn’t work as intended. China called his bluff and he was forced to either follow through on the extreme consequences he said would follow if China did not give him what he wanted, or back down. Everything slowed down from there. The negotiations are at an impasse.
- Anchors can be a powerful means of steering negotiations
- But if you anchor, be sure you’re willing to back it up
- If you commonly back down, others will learn that they can call your bluff
Use anchoring, but do so wisely and judiciously. You can hear Allan’s broader perspective on President Trump’s use of anchoring on episode #121 The Negotiations Ninja Podcast.