As some of you know, I am a business development executive with a specialty in negotiating partnerships.   One of the major beliefs that people in the industry hold is that the first person who makes an offer loses.  This theory is based upon the assumption that making the first offer, you are providing insight into the value of the partnership to the other side without receiving any insight from him.  In essence, you are limiting your upside and allowing your opponent to negotiate you down.  If this is true, the problem arises that neither party will make a proposal and discussions will continue without conclusion. 

I have not been a big believer in this approach because in the end, you need to determine if you should continue conversations and reach a deal or whether you should cut bait and move on.  To support this approach, consider the concept of Anchoring.  Under this theory, the first person to state a number will usually force the other person to give a new number based on the first.

Anchoring happens even when the number is completely random.

In one study, participants spun a wheel that either pointed to 15 or 65. They were then asked the number of countries in Africa that belonged to the UN. Even though the number was arbitrary, answers tended to cluster around either 15 or 65.

So what should we take from this?  In the end, there may be benefits in going first or waiting until the other guy propose an offer but in the end, you need to decide to move forward or end your conversations.  So you need to ensure that communications continue so do not be afraid to be the first one to make an offer.