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In the United States, business is based primarily on law, contracts, rules and regulations, and very secondarily on trust and relationships. In most other countries and cultures, business is based primarily on trust and relationships and secondarily, on law and contracts. For example, we are currently doing significant business in Europe with no signed contracts, just email memos between the parties. We trust each other and value that trust sufficiently that no one wants to risk losing it which is what contributes to the durability of the agreements and relationship.

In America, we put our trust in the judicial system abrogating any need for personal relationships and trust. In describing the United States approach, Jonah Blank in Foreign Policy Magazine (June 3rd 2013) puts it well when he writes: “Americans view a deal in coldly contractual terms: You give me this, I give you that in return, we shake hands and may never see each other again. Americans buy cars from complete strangers and refinance houses with banks that are bankrupt. This can be done because there is trust in the overall system: rule of law, functioning courts, policemen accountable to the public rather than the local warlord. The system gives Americans the confidence to entrust their credit card numbers to call centers staffed by prison inmates. (You didn’t know that? Yes, it’s true.)”

While strong arguments could be made in favor of both the legal/contractual based system of commerce and the trust/relationship based one, the legal/contractual based system falls short however, and becomes costly, cumbersome and inefficient when a dispute arises.

“Who should make the first offer? “Are we put at any disadvantage if we do or if we don’t make the first offer?” “How shall we respond if they make a first unreasonable offer?” These are questions we are constantly asked when advising clients in negotiations.

The conventional theory upon which these questions are based, is that by putting out a first offer, you have the advantage of anchoring expectations around that offer, and the further the other side deviates from that “anchor” the more unreasonable they appear. They are therefore limited in their range of deviation by that anchor, or so the theory goes.

In our experience however, this seldom works. Usually the other side becomes defensive and emotional. They skillfully perform the artful “flinch”, followed by a brazen, equally extreme and unrealistic counter-offer.

So our answer to the “First Offer Dilemma” is: “It really doesn’t matter as long as you possess and apply a potent negotiation process, refined technique and practiced skill!”

This is a question we are often asked by clients. Why won’t they agree? Why are they not listening to us? Why are they not giving us what we want? Why are they being so unreasonable?

When faced with that question, my response is usually “What are you doing or not doing that is allowing them to behave in that way?”

Consider the following report about our chief diplomat’s recent efforts to persuade Bagdad to establish a no-fly zone over Iraqi airspace for Iranian aircraft flying supplies in support of Assad.

“We had a very spirited discussion on the subject of the overflights.” Or so said John Kerry, on Sunday, after the unannounced visit to Baghdad that preceded his unannounced visit to Afghanistan. Kerry told the Iraqis the U.S. did not appreciate Iranian arms reaching Syrian strongman Bashir al-Assad’s hands via Iraqi airspace. “I also made it clear to him that there are members of Congress and people in America who increasingly are watching what Iraq is doing and wondering how it is that a partner in the efforts for democracy and a partner for whom Americans feel they have tried so hard to be helpful — how that country can be, in fact, doing something that makes it more difficult to achieve our common goals, the goal expressed by the prime minister with respect to Syria and President Assad.” (Foreign Policy Magazine March 25, 2013).

In our work assisting executives, diplomats and negotiation teams in high stake negotiations, we have found often that their natural tendency is to incessantly assert their positions, and the more resistance they encounter and the more they perceive their key interests to be threatened, the louder and more aggressively they assert themselves.

Typically, when observing this sort of pattern in negotiations, I allow this to play out a little before intervening and redirecting. I can attest categorically that this approach never ends in a productive, constructive, mutually satisfying result.

Often it descends into an ugly cycle of reaction and counter-reaction with each side trying harder and louder, to impose their will on the other.

Why, I ask myself, do these otherwise sophisticated professionals engage in such primitive and ineffective negotiation behavior? I can only conclude that it is because they have never been provided with an effective and refined alternative approach and therefore resort to the “default” battle-of-wills approach that we all learned as children.