How to Negotiate Your Salary: The First Number You Say Matters More Than You Think
Daniel Kahneman didn’t just study the anchoring effect in laboratories: he also taught it in his negotiation classes. His advice for handling an outrageous opening offer wasn’t to stay calm and counter in kind. It was, literally, to threaten to walk out.
In Thinking, Fast and Slow (2011), the psychologist and Nobel laureate in Economics devotes much of the “Anchors” chapter to showing how far an irrelevant number can pull an estimate off course. But there’s a less-quoted, more directly practical passage where Kahneman stops speaking as a researcher and starts speaking as a negotiation instructor.
Whoever speaks first anchors the conversation
“We see the same strategy at work in the negotiation over the price of a home, when the seller makes the first move by setting the list price,” Kahneman writes. “As in many other games, moving first is an advantage in single-issue negotiations (for example, when price is the only issue to be settled between a buyer and a seller).”
That logic carries over almost unchanged into a salary negotiation: the first figure anyone states, whether it’s the company offering a salary or the candidate asking for one, becomes the mental reference point that’s already hard to move away from, even for the side that didn’t propose it.
What the experiments show
Adam Galinsky and Thomas Mussweiler (2001) tested this in three buying-and-selling experiments, face to face and by email. Whoever made the first offer, buyer or seller, got the better outcome, and that first offer strongly predicted the final price.
For salaries specifically, Todd Thorsteinson (2011) asked students to play hiring managers for an administrative position. When the candidate had first mentioned an exaggerated figure, even as a joke, the salary offers shifted upward. The effect was observed in a role-play, not in real interviews, but it points in the same direction as the rest of the research on anchoring.
The mistake of answering a provocation with another one
Kahneman also describes what happens when that first figure is, plainly, an abuse. His advice to negotiation students was very specific: faced with an outrageous proposal, don’t come back with an equally outrageous counteroffer in the opposite direction, because that only creates a gap between both positions that will be very hard to close afterward.
Instead, he writes, “you should make a scene, storm out or threaten to do so, and make it clear (to yourself as well as to the other side) that you will not continue the negotiation with that number on the table.”
This isn’t advice about tone, but about how to stop a specific number from settling in as the reference point before the real conversation has even begun.
The technique that actually reduces the anchoring effect
Kahneman himself acknowledges that ignoring an anchor, or resolving “not to be influenced by it,” rarely works: the effect operates below conscious reasoning.
What did work in Galinsky and Mussweiler’s experiments was directing attention to information that contradicts what the first offer suggests. The first mover’s advantage disappeared when the other side thought about the opponent’s alternatives, their reservation price, or their own target. Kahneman interprets this as deliberately activating “System 2”, slow and analytical thinking.
The difference isn’t in ignoring the number, but in actively testing it against your own data before responding to it.
What the research suggests for a salary negotiation
Without turning it into a recipe, the studies above paint a fairly clear picture of what carries weight in these conversations:
- Your own alternative. Having another offer or an acceptable current situation is what the Harvard school calls a BATNA, and it sets the point below which accepting isn’t worth it.
- An external reference. Market data for the role is exactly the “information that contradicts the anchor” that neutralized the first offer in the experiments.
- Who opens. In a single-issue negotiation, opening with an ambitious but justifiable figure gives you an edge. When little is known about the reasonable range, a poorly calibrated figure can also work against you.
- The figure isn’t a judgment about the person. A low first offer is a tactical move, not an assessment of whoever receives it, and reading it that way helps avoid getting anchored to it.
Why a raise hurts more than it seems it should
There’s a second, less obvious layer to any salary negotiation. Kahneman explains that loss aversion, a central finding of the work he did with Amos Tversky and the basis of the Nobel Prize he received in 2002, makes renegotiations especially slippery terrain.
He describes it as “an ever-present feature of negotiations, especially of renegotiations of an existing contract, the typical situation in labor negotiations”: the existing terms function as the reference point, and any proposed change is perceived as a concession from one side to the other.
For the company, raising a salary is a real cost: it’s money coming out of a budget that was already planned. What loss aversion adds is that this cost weighs more for the one paying it than the same amount pleases the one receiving it. Kahneman sums it up in a line that explains why these conversations cost more than pure logic would suggest:
The concessions you make to me are my gains, but they are your losses; they cause you much more pain than they give me pleasure.
Daniel Kahneman, Thinking, Fast and Slow
Understanding this doesn’t change the outcome of a salary negotiation on its own, but it does explain something almost everyone has felt at some point: why the other side reacts to a reasonable request as if it were being asked for a disproportionate sacrifice.
That phenomenon, alongside the anchoring effect, is also one of the axes we explore in our negotiation style quiz, designed to identify how you tend to position yourself when the division of something (money, time, responsibility) is at stake.
Sources
- Galinsky, A. D. and Mussweiler, T. (2001). First offers as anchors: The role of perspective-taking and negotiator focus. Journal of Personality and Social Psychology, 81(4), 657-669. https://doi.org/10.1037/0022-3514.81.4.657
- Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.
- Thorsteinson, T. J. (2011). Initiating salary discussions with an extreme request: Anchoring effects on initial salary offers. Journal of Applied Social Psychology, 41(7), 1774-1792. https://doi.org/10.1111/j.1559-1816.2011.00779.x
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Frequently asked questions
Why does the first number said in a negotiation carry so much weight?
According to Daniel Kahneman, any number mentioned before a price or a salary is set works as an anchor: the rest of the conversation tends to orbit around that figure, even though neither side consciously admits it. It's the same psychological mechanism at work in a home's list price.
What did Kahneman advise doing if the other side opens with an outrageous figure?
Not to respond with an equally extreme counteroffer in the opposite direction, because that creates a gap that becomes almost impossible to close later. His advice, as a negotiation instructor, was to make it clear (to the other side and to yourself) that the conversation cannot continue with that number on the table, even threatening to walk out.
Is there a way to resist the anchoring effect during a negotiation?
Psychologists Adam Galinsky and Thomas Mussweiler found that the first mover's advantage disappears when the other side focuses on information that contradicts the offer: the opponent's alternatives, their reservation price, or one's own target.
Does naming a very high figure work, even as a joke?
In an experiment by Thorsteinson (2011), students playing hiring managers offered higher salaries when the candidate had first mentioned an exaggerated figure, even one framed as a joke. It's a role-play study with students, so the size of the effect in real interviews is uncertain.
Why does negotiating a raise usually feel harder than negotiating a discount?
Because of the loss aversion Kahneman describes: in a renegotiation, the current terms act as the reference point and any concession the company makes is perceived as a loss, not as a simple give. By that logic, dividing up an already-set budget is psychologically more costly than negotiating over a gain that doesn't yet exist for anyone.
