Cracking this joke could get you a better deal in salary negotiations

Putty in your hands.
Putty in your hands.
Image: Reuters/Wolfgang Rattay
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As Quartz has told you once this year already, you are almost certainly starting salary negotiations wrong, by opening the bidding with a single number rather than a range. A study by Columbia University business school professors indicated that suggesting an ambitious range with a high “floor” number can manage expectations and set a person up for an attractive counter offer.

Now we have some evidence-based advice that’s slightly more audacious: When you sit down to chat about your desired salary, “anchor” the conversation by launching with an outrageously high number. In other words, start with a somewhat corny joke about how much you really want. “Well, what I’d like is $1 million,” you might toss out.

Anchoring is an age-old tactic used by salespeople and negotiators. The anchor effect, a type of cognitive bias, says that people are unconsciously influenced by the first or most recent piece of information they were presented with. It’s why a $50 sweater will look more reasonable when displayed next to $150 shirts. Restaurants use the same strategy when designing menus.

Researchers have proven that anchors can play a hidden role in decisions we make about the appropriate price for a car or a house. It even has an impact on the amount a contestant on the game show Jeopardy will gamble when they come across the randomly hidden “daily double.” An economics professor at Niagara University recently analyzed the amounts wagered in thousands of Jeopardy games over several years and found that people will bet more when the “daily double” option is hidden behind a higher-valued question, even when a high bet isn’t the wisest move.

To show that anchoring can work to your advantage as a wise crack at the outset of a salary discussion, Todd Thorsteinson, a University of Idaho psychological scientist, set up a lab study involving 200 students. They were asked to act as though they were managers making a job offer to a pre-approved candidate, and to type an proposed salary offer into a computer in response to various candidates.

In some cases they were told that the candidate’s response to a question about how much she wanted to earn was a joke. “I’d like to make $100,000, but really I’m just looking for something that’s fair,” she had said. A second subset of participants made offers to a candidate who, they were told, had taken the opposite approach, having quipped, “I’d work for $1, but I really I am just looking for something fair.” In both cases the “managers” were given the candidate’s past salary, $29,000, as a secondary piece of information. Finally, in the control group, the participants were only supplied with the pretend interviewee’s previous salary.

The results, published in the Journal of Applied Social Psychology in 2011, and recently revisited by the Association for Psychological Science blog, proved that even implausibly high anchors colored the managers’ decisions. If a candidate had asked for $100,000, he or she was offered an average of $35,383, compared to $32,463 in the control group. (Asking an employee’s prior salary will become illegal in Massachusetts in 2018, and this practice is the subject of much debate in several other states currently, particularly for its influence on pay parity.)

The $1 joke had little effect, presumably because the students were reluctant to offer someone less than they had made at their old job,  Thorsteinson wrote in the study.

Since most salary increases are expected to remain within the ho-hum 3% range in 2017, we suggest you try your own experiment and see whether the joke that worked for hypothetical job seekers might also apply during a real salary review. We hope it helps nudge what professional negotiators call the ZOPA (zone of possible agreement) in your favor.