Many people avoid making negotiation offers as a range of values, because they are concerned that co-negotiators will “anchor” on the range’s lower value.
The power of first offers as negotiation anchors was demonstrated in research by University of Chicago’s Nicholas Epley and Thomas Gilovich of Cornell.
However, range offers actually led to stronger outcomes in controlled studies by Columbia University’s Daniel R. Ames and Malia F. Mason.
This team suggested that range offers provide “dual anchors” that signal a negotiator’s knowledge of value and politeness.
Negotiators’ credibility, interpersonal style, and value awareness are also associated with the anchor value’s influence settlement outcomes.
Range and point opening offers have varying impacts, depending on the proposer’s perceived preparation, credibility, politeness, and reasonableness.
Ames and Mason tested three types of negotiation proposal ranges:
- Bolstering range includes the target point value as the bottom of the range and an aspirational value as the top of the range.
This strategy usually yields generous counteroffers and higher settlement prices, and is recommended based on their research.
- Backdown range features the target point value as the upper end of the range and a concession value as the lower offer.
This approach often leads to accepting the lower value and is not recommended.
- Bracketing range spans the target point offer and often has neutral settlement outcomes for the offer-maker.
This tactic provides some relational benefits because they were seen as less aggressive.
Extreme anchors can be seen as aggressive and may lead to negotiation breakdown, according to INSEAD’s Martin Schweinsberg with Gillian Ku of London Business School, collaborating with Cynthia S. Wang of University of Michigan, and National University of Singapore’s Madan M. Pillutla.
Even negotiators with little power in their studies were more likely to walk away from extreme anchors.
Likewise, high-power negotiators said they were offended by extreme anchors.
Previously, Mason and team showed the benefit of precise single number offers, and these findings suggest the value of range offers.
The research group concluded that point offers and range offers are independent and interactive processes that influence settlement values:
“…bolstering-range offers shape the perceived location of the offer-maker’s reservation price, (and) precise first offers shape the perceived credibility of the offer-maker’s price proposal.
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