Tag Archives: Cynthia S. Wang

Range Offers vs Point Offers for Advantageous Negotiation Settlements

Daniel Ames

Daniel Ames

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.

Malia F Mason

Malia F Mason

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.

Nicholas Epley

Nicholas Eple

Negotiators’ credibility, interpersonal style, and value awareness are also associated with the anchor value’s influence settlement outcomes.

Thomas Gilovich

Thomas Gilovich

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.
Martin Schweinsberg

Martin Schweinsberg

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.

Gilliam Ku

Gilliam Ku

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.

  • When do you prefer to present a precise negotiation offers instead of a negotiation range?

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Precise Negotiation Offers Yield Better Bargaining Results

Malia F Mason

Malia F Mason

Opening negotiation offers usually anchor the discussion and shape settlement values.
Many people make opening offers in “round” numbers like $10 instead of “precise” numbers like $9.
This strategy rendered less effective results in negotiation experiments, reported Columbia’s Malia Mason, Alice J. Lee, Elizabeth A. Wiley, and Daniel Ames.

Y Charles Zhang

Y Charles Zhang

Negotiators can improve negotiation outcomes by specifying offers in precise values because they more potently anchored the negotiation range.
In addition, negotiators who proposed precise offers were perceived as more confident, credible, and “well-informed” regarding actual value.

Norbert Schwartz

Norbert Schwartz

Consumers reported less confidence in precise estimates when they doubt the communicator, found University of Michigan’s Y. Charles Zhang and Norbert Schwarz of University of Southern California.

Some recipients of precise offers view these proposals by their negotiation partners as “inflexible.
However, recipients of precise offers made more conciliatory counter-offers with smaller adjustments and more favorable final settlements.
Precise offers were associated with more favorable final deals even when the negotiator opened with a less ambitious precise offer.

Martin Schweinsberg

Martin Schweinsberg

Precise offers are less likely to be seen as aggressive by a co-negotiator, 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 stall progress toward settlement if a negotiation partner takes offense.

Gillian Ku

Gillian Ku

This risk of stalemated negotiation increases if negotiators see themselves in a lower-power position and receive an extreme offer.
These negotiators may be more willing to end negotiations,

Manoj Thomas

Manoj Thomas

Precise offers can obscure their actual value, noted Cornell’s Manoj Thomas and Vrinda Kadiyali with Daniel H. Simon of Indiana University.
Buyers underestimated the size of precise prices, particularly under uncertain conditions:  U.S. homebuyers paid more when list prices were precise.

Vrinda Kadiyali

Vrinda Kadiyali

Precise offers provide some of the benefits of favorably anchoring negotiation discussions while reducing risks of “offensive” 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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