A nice brief analysis from Eric Barker of different strategies when you’re negotiating one-on-one with a buyer, versus when you are auctioning something off.
In negotiations:
the final selling price tends to be higher when the seller makes the first offer and lower when the buyer moves first. This phenomenon is known as anchoring.
while in auctions:
in auctions starting low can often produce a higher selling price…in auctions the number of bidders is determined by the features of the auction. Maximizing the number of participants in an auction benefits the seller—a greater number of participants will usually result in a higher ending price
So if you have multiple buyers of what you’re selling and you can only sell to one of them, the auction strategy may let you achieve a higher price if you start with a low bid and let people drive each other’s willingness-to-pay upwards through competition.
While if you are selling to several customers and you can sell to all of them (for instance if you are a lawyer selling your legal advice) individual negotiations are the way to go; and be sure to make the opening offer!