Without implying any bad will about the author of this post, who is a recruiter, recruiters are incentivized to close deals, not to get you the best possible package. It is possible that this background would convince a recruiter that advice which is against your interests is still a good idea, because if he adopts advice which will predictably results in employees underpricing themselves, his conversion rate from interviews to paychecks will improve, possibly dramatically. If his placements are routinely leaving $10k on the table, that only costs him $3k per placement, which might on a subconscious level either a) not be motivational or b) might be a totally rational decision because of the increased volume of placements he gets by advising people to take any reasonable deal.
My father is a real estate agent, and real estate agents have demonstrable blind spots (seriously, academic literature exists on this) for negotiation when negotiating for clients versus when selling their own homes. When they're selling their own home, five hours of extra work might add $5,000 to the sales price, so of course they go the extra mile. When they're selling a client's home, five hours of extra work might add $5,000 to the sales price but their commission check only goes up by $300, so they'll generally opt to tell you "That's a really fair offer. You should take it. Can we close this today? I have a young couple who I'd really like to meet with now about buying a brownstone, and the expected value of my time with them is way higher than the marginal value of my time with you. Oh whoops did I just say that out loud?"
The topic that patio11 mentioned is covered pretty well in chapter 2 of Freakonomics. The actual text doesn't seem to be part of the official sample excerpt, but somebody posted the relevant portion in a forum here: http://www.nachi.org/forum/f11/exerpt-freakonomics-book-rega...
This is not an endorsement of other portions of the book as a whole.
I can see where you are coming from but ultimately I disagree. The strong counter-argument in the comments here has prompted me to write a follow-up post clarifying my position in detail so hopefully that will help eradicate the notion that I would weaken a candidates negotiating position for my own benefit regardless of whether I do it consciously or otherwise.
But you're just one out of tens of thousands of recruiters. You have to believe something pretty radical to think that recruiters on the whole are immune to incentives.
We can safely assume that you're conscientious and that you go out of your way to defend the interests of candidates. Then we can move on to telling developers how to deal with normal recruiters.
This particular debate, just remember, is about whether you should disclose your current salary to a recruiter or prospective employee. The answer is: you simply should not do that, full stop. If you disagree, it would be helpful if you disagreed directly and provided evidence for your view; that would be more constructive than centering the discussion on your own professionalism and ethics, which nobody wants to call into question.
I had originally included a lengthy argument against disclosing your salary to recruiters specifically. That element was removed due to the fact that the post was aimed at graduates who most likely won't have to deal with recruiters for a number of years. In my follow-up post I am dealing with both topics specifically. Not negotiation but purely the facts as to why I think it's best to withhold your salary from a recruiter and disclose it to an employer.
Fortunately I am not just one out of tens of thousands of recruiters. I've been in this game for three years, prior to which I was on the other side of the fence managing a team of 8 people, regularly interviewing potential employees and entering negotiation battles as an employer with a strict budget.
My father is a real estate agent, and real estate agents have demonstrable blind spots (seriously, academic literature exists on this) for negotiation when negotiating for clients versus when selling their own homes. When they're selling their own home, five hours of extra work might add $5,000 to the sales price, so of course they go the extra mile. When they're selling a client's home, five hours of extra work might add $5,000 to the sales price but their commission check only goes up by $300, so they'll generally opt to tell you "That's a really fair offer. You should take it. Can we close this today? I have a young couple who I'd really like to meet with now about buying a brownstone, and the expected value of my time with them is way higher than the marginal value of my time with you. Oh whoops did I just say that out loud?"