Tag Archives: Cynthia S. Wang

“Precise” Offers Provide Negotiation Advantage

Malia F Mason

Malia F Mason

Opening negotiation offers typically “anchor” the discussion and shape settlement values.
Many people make opening offers in “round” numbers like $10 instead of “precise” numbers like $9.
However, “round number offers” were less effective than “precise” offers in negotiations, found Columbia’s Malia Mason, Alice J. Lee, Elizabeth A. Wiley, and Daniel Ames.
Negotiators may improve their outcomes by specifying offers in less typical precise values.

Y Charles Zhang

Y Charles Zhang

Precise first offers more potently anchored the negotiation range than round number proposals, and those who proposed these precise offers were perceived as more confident, credible, and “well-informed” regarding actual value.

Norbert Schwartz

Norbert Schwartz

This finding complements observations by University of Michigan’s Y. Charles Zhang and Norbert Schwarz of University of Southern California that consumers have less confidence in precise estimates when they doubt the communicator.

This type of consumer skepticism also occurred when communicators engage in less “cooperative conversational conduct norms” during negotiations.

H Paul Grice

H Paul Grice

These conversational norms were defined by Berkeley’s H. Paul Grice in Grice’s maxims, and advocate communicating:

  • Briefly,
  • Clearly,
  • Relevantly,
  • Truthfully,
  • Offering only as much and content as required.

A less positive aspect of precise offers is that they could signal “inflexibility” to some co-negotiators.
However, this tactic led people who received precise offers generally made more conciliatory counter-offers, leading to smaller adjustments and more favorable final settlements.
Precise offers also led to better final deals even when the negotiator opened with a less ambitious, but precise offer.

Martin Schweinsberg

Martin Schweinsberg

Another benefit of precise offers is that they are less likely to offend a co-negotiator by signaling aggression or greed, according to INSEAD’s Martin Schweinsberg collaborating with Gillian Ku and Madan M. Pillutla of London Business School’s and Cynthia S. Wang of Oklahoma State University.
Ambitious first offers may lead a negotiation partner to walk away from the discussion, resulting in an impasse or stalled progress toward a final settlement.

Gillian Ku

Gillian Ku

In addition, negotiators who see themselves in a lower-power position are more likely to walk away, even though both low-power and high-power negotiators were equally offended by extreme offers.
Though an extreme offer may result in high rewards, it can be a more risky strategy than offering a more moderate precise offer.

Manoj Thomas

Manoj Thomas

Another advantage of more precise offers is that buyers may not recognize their actual magnitude:  Buyers underestimated the size of precise prices, particularly under uncertain conditions in studies by Cornell’s Manoj Thomas and Vrinda Kadiyali with Daniel H. Simon of Indiana University.

In fact, U.S. homeowner participants in their lab said they would pay a higher price quoted in precise numbers than when stated in round number in the team’s analysis of actual residential real estate transactions in two U.S. markets.
In fact, buyers actually paid more when list prices were precise in experiments by Thomas and team.

Vrinda Kadiyali

Vrinda Kadiyali

Precise offers provide some of the benefits of favorably anchoring negotiation discussions while reducing risks of extreme offers.

-*How effective have you found “precise” opening offers in achieving your negotiation goals?

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Diverse Teams Analyze Problems More Effectively

When people anticipate working with people similar to themselves, they process information less effectively than when they anticipate collaborating with diverse co-workers.

Denise Lewin Loyd

Denise Lewin Loyd

Volunteers completed a survey about their political attitudes, read a murder mystery, determined the perpetrator, and rated their confidence in their conclusion in a study designed by MIT’s Denise Lewin Loyd, Cynthia S. Wang of Oklahoma State University, Columbia’s Katherine Phillips  and Robert Lount Jr. of Ohio State University.

Participants then wrote a statement about their conclusions before meeting another volunteer who had a different conclusion about the perpetrator to solve the case.

Cynthia Wang

Cynthia Wang

They learned the other person’s political affiliation and opinion about the murder and wrote their statements but were told the experiment was over, without meeting the other person.

Loyd’s team analyzed these preparation statements to determine “elaboration,” a measure of analysis complexity and depth, when people anticipated working with others who have different attitudes.

Katherine Phillips

Katherine Phillips

People who said they were members of any political party wrote less-detailed statements when they anticipated meeting with someone affiliated with the same political party.
In contrast, participants wrote more detailed statements when they anticipated meeting someone of a different political orientation.

Volunteers prepared less carefully when they anticipated working with someone who shared their views.
In contrast, when they expected to work with someone holding different views, they applied greater critical thinking to their problem analyses.

Robert B Lount Jr

Robert B Lount Jr

Some volunteers were instructed before preparing their written case analysis that developing a positive interpersonal relationship with the other person would increase solution accuracy.

Other participants learned that “concentrating on the task rather than the interpersonal relationship was most important way to have a productive meeting.”

People primed to focus on their interpersonal relations wrote less detailed preparation statements, suggesting that analytic rigor was sacrificed for interpersonal harmony.
In addition, when people were primed to focus on the task, they produced more thoroughly considered solutions.

When volunteers actually met to solve the case after writing their statements,
partners with the most accurate solutions came to the meeting with most detailed case analyses.

People in homogeneous groups may prepare less completely if they focus on cultivating interpersonal harmony and avoiding conflict.
In contrast, diverse groups may not attempt to form close social relationships, so are more able to focus on task analysis and solutions.
Diverse teams, then, provide multiple perspectives and greater focus on shared work tasks.

Ron Elsdon

Ron Elsdon

However, other researchers advocate workplace affiliation as a way to engage and retain employees.
Ron Elsdon, formerly of Cambridge University and Air Liquide America, suggested that workplace affiliation leads to organizational value creation, and Gallup’s Marcus Buckingham and Curt Coffman argued that “having a best friend at work” is both important for employee engagement and “one of the most controversial of the 12 traits of highly productive workgroups.”

Marcus Buckingham

Marcus Buckingham

Social relationships among similar people at work may feel good, but may not lead to the most effective or innovative problem analysis.

-*To what extent have you observed homogeneous work groups focusing on maintaining harmony at the expense of rigorous task analysis?

Curt Coffman

Curt Coffman

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