Tag Archives: negotiation

Anxiety Undermines Negotiation Performance

Maurice Schweitzer

Maurice Schweitzer

Anxious negotiators make lower first offers, exit earlier, and earn lower profits  due to their “low self-efficacy” beliefs, according to Harvard’s Alison Wood Brooks and Maurice E. Schweitzer of University of Pennsylvania,

Alison Wood Brooks

Alison Wood Brooks

Brooks and Schweitzer induced anxious feelings or neutral reactions during continuous “shrinking-pie” negotiation tasks.
Negotiators who feel anxious typically expect to achieve lower profits, present more cautious offers, and respond more cautiously to proposals by negotiation counterparts.

Negotiators who achieved more better outcomes managed emotions with cognitive strategies including:

Julie Norem

Julie Norem

  • Strategic optimism, indicated by calmly expecting positive outcomes, according to University of Miami’s Stacie Spencer and Julie Norem of Wellesley,
  • Reattribution, by considering alternate interpretations of events to increase optimism and self-efficacy beliefs.

Cognitive strategies with both mixed results include:

  • Andrew Elliot

    Andrew Elliot

    Self-handicapping, avoiding anxiety-provoking situations, and creating self-defeating obstacles to explain poor outcomes and preserve self-esteem, according to University of Rochester’s Andrew Elliott and Marcy Church of St. Mary’s University,

  • Defensive pessimism, marked by high motivation toward achievement coupled with negative expectations for future challenges, leading to increased effort and preparation, according to Wellesley College’s Julie Norem and Edward Chang of University of Michigan.
Edward Chang

Edward Chang

Norem and Cantor concluded that defensive pessimists performed worse when told that that they should expect to perform well on anagram and puzzle tasks, based on their previous academic performance,.

Defensive pessimism among university students was related to lower self-esteem, self-criticism, pessimism, and discounting previous successful performances, according to Norem and Brown’s Jasmina Burdzovic Andreas.

Jasmina Burdzovic Andreas

Jasmina Burdzovic Andreas

However, their longitudinal study demonstrated that self-esteem increased to almost the same levels as optimists during university years.
Pessimists’ precautionary countermeasures may have resulted in strong performance, which built credible self-esteem.

Defensive pessimism may be an effective, if uncomfortable, approach to managing anxiety and performance motivation.

-*How do you manage anxiety in high-stakes negotiations?

RELATED POSTS:

©Kathryn Welds

Ask for What You Want: You Have More Influence Than You Think

Most people underestimate the likelihood that requests for help will be granted, particularly after experiencing previous refusals, according to Stanford’s Daniel Newark and Francis Flynn with Vanessa Lake Bohns of University of Waterloo.

Francis Flynn

Help-seekers were more likely to believe that a previous refusal would be followed by another refusal to a similar request. 
However, help-seekers underestimated the compliance rate of potential helpers who previously refused assistance.
This suggests that most people agree with a subsequent request, often to reduce discomfort of rejecting others’ overtures for help.

Vanessa Bohns

Vanessa Bohns

Participants estimated they would need to ask 10 people to have three agree to lend their mobile phones for brief calls.
In fact, these volunteers had to ask six people for help before it was given, 40% fewer than expected.
Most people have a pessimistic bias about the likelihood that others will provide assistance, they concluded.

Volunteers requested two favors of strangers:  Complete a brief survey and take a letter to a nearby post office.
Help seekers predicted that people who refused the first request to complete the survey would be less likely to take the letter to the post office.

More people agreed to the second request than to the first request, showing that after people refused a request, they were more likely to agree the second time.
Requesters tended to “anchor” on the first refusal, and hesitated to make a second request.
However, this finding suggests that requesters have a greater chance of success after initial refusal, so it’s advisable to muster resilience and persistence.

Requesters and help-seekers analyzed requests using different criteria:  Requesters focused on the magnitude of the “ask,” whereas potential helpers receiving the request considered the inconvenience costs of saying “yes” compare with the interpersonal and self-image costs of saying “no.”

Requesters benefit from expanding the pool of those they ask, not just those who reliably and consistently agree.
These individuals are typically overburdened by requests, and those who are more selective in their assistance are underutilized and may be willing to assist.

Potential helpers underestimated help-seekers’ discomfort and embarrassment in asking for assistance, in previous studies by the team.
This may result in less willingness to help underutilized formal support programs.
The most effective way to increase help-seeking is to encourage helpers to focus on reducing help-seekers’ subjective discomfort in asking rather than advocating the practical benefits of asking for help.

Mahdi Roghanizad

Mahdi Roghanizad

Bohns extended this focus on the impact of interpersonal discomfort in deciding whether to commit an unethical act in research with University of Waterloo colleagues Mahdi Roghanizad and Amy Xu.

People who observed the unethical act but didn’t participate (“instigators”) underestimated their influence over those who committed the asocial acts.

Volunteers enlisted people they didn’t know to tell a small untruth or to commit a small act of vandalism after predicting the ease of enlisting others in these acts.
In related investigations, online participants responded to hypothetical vignettes about buying alcohol for children, and taking office supplies home for personal use.

Bystanders underestimated their impact on others when they suggested engaging in unethical acts.
Further, interpersonal discomfort caused participants to commit the asocial act to avoid conflict.

These results suggest that most people inaccurately estimate their influence, particularly in situations that can evoke interpersonal discomfort.
At the same time, Bohns and Flynn reported that employees’ systematically underestimate their influence over others in the workplace.
Most employees expect their efforts to be futile.

This pessimistic bias can limit employees’ willingness to:

  • Lead business transformation initiatives,
  • Recognize personal contributions to others’ performance issues,
  • Voice concerns about unethical workplace practices.

This underestimation bias may be mitigated by variations in:

  • Comparative judgments,
  • Objectifying an influence target,
  • Actual degree of personal influence compared to perceived influence,
  • Means of influence, ranging across incentives, suggestions, reinforcements, punishments,
  • Organizational culture. 

These findings suggest the benefit of asking for what you want, even after rejection and that you have more influence over others than you expect.

-*How do you assess your likelihood of getting what you want when you ask?

-*How likely are others to influence you by evoking social discomfort to increase your compliance?

RELATED POSTS:

©Kathryn Welds

Apologies: Repairing Relationships, Creating Interpersonal Peace

Jennifer Robbennolt

Jennifer Robbennolt

Apologies can resolve legal disputes ranging from personal injury cases to wrongful firings, according to University of Illinois’s Jennifer Robbennolt.

She found that admissions of guilt and remorse give plaintiffs and “wronged” parties a sense of satisfaction, fairness, and forgiveness that enables settlement and reduces monetary damage awards.

Robbbennolt asked more than 550 volunteers to serve as “plaintiffs” in an experimental scenario, then report their reactions to “settlement levers” including:

  • Reservation prices,
  • Aspirations,
  • “Fair” settlement amounts.

Apologies enabled “injured” parties to modify their perceptions of the situation and of the “offender,” and to become more willing to participate in settlement discussions.
In addition, apologies changed the values injured parties’ assigned to settlement levers, so there was increased likelihood of settling the “case.”

The type of apologies and situational context affect the likelihood of case settlement.
Apologies that acknowledge responsibility and “blame” are more influential than apologies that express sympathy.
Acknowledging accountability reduces the injured party’s anger, increases willingness to accept a settlement, and moves toward emotional “closure.”

Janelle Barlow

Janelle Barlow

Apologies are a well-known tactic to handle complaints in customer service settings, where “every complaint is a gift,” according to Janelle Barlow of TMI and Claus Møller.

Claus Møller

Claus Møller

They view complaints as valuable feedback that points out a gap between customer requirements and business performance.
In addition, complaints indicate needed changes in products, services, and market focus.

Benjamin Ho

Benjamin Ho

Medical settings have found that apologies averted medical malpractice cases, sped settlement, and reduced financial awards, according to Cornell’s Benjamin Ho.

However, lawyers in other Robbennolt studies expressed concern that admission of guilt may lead to larger settlements.
This worry led to at least thirty-five U.S. states making some apologetic statements inadmissible at trial.

-*How do you determine when apologies are likely to repair a relationship and lead to “closure”?
-*What are the signs that apologies can deepen an interpersonal rupture?

RELATED POSTS:

©Kathryn Welds

“Feminine Charm” as Negotiation Tactic

Charlotte Brontë

Charlotte Brontë

Jane Austen

Jane Austen

“Feminine charm” was once one of the few available negotiation tactics for women, as portrayed in novels by Charlotte Brontë, Jane Austen, and George Eliot.

Former United States Secretary of State Madeleine Albright said that she used “charm” in negotiations with heads of state, inspiring University of California, Berkeley’s Laura Kray and Alex Van Zant with Connson Locke of London School of Economics to investigate “feminine charm” in negotiation situations.

Madeleine Albright

Madeleine Albright

Laura Kray

They found that “the aim of feminine charm is to make an interaction partner feel good to gain compliance toward broader interaction goal.
“Charm” is characterized by:

  • -Friendliness, or concern for the other person,
  • -Flirtation, or concern for self and self-presentation.

Hannah Riley Bowles

They found that “feminine charm” (friendliness plus flirtation) partially buffered the social penalties (“backlash”) against negotiating, identified by Harvard’s Hannah Riley Bowles and her colleagues.

Linda Babcock

Women who were perceived as flirtatious achieved superior economic deals in negotiations compared with women who were seen as friendly, validating suggestions by Carnegie Mellon’s Linda Babcock, that women achieve better negotiation outcomes when they combine power tactics with warmth.

Their findings expose “a financial risk associated with female friendliness:…the resulting division of resources may be unfavorable if she is perceived as ‘too nice’.”

-*How do you mitigate the “financial risk associated with female friendliness”?

RELATED POSTS:

©Kathryn Welds

Do You Have Agreement Bias? Accept Bad Deals?

Taya Cohen

Taya Cohen

Agreement bias is the tendency to settle in negotiation, even if that decision results in a disadvantageous outcome in business and interpersonal relationships.

During negotiation, participants may enter a “negative bargaining zone,” when their positions and interests diverge so much that there is little possibility of crafting a win-win resolution.
Skillful negotiators usually end the discussion if it is unlikely to move beyond the “negative bargaining zone.”

Leigh Thompson

Leigh Thompson

However, negotiators may be vulnerable to accepting a disadvantageous deal for several reasons, explained Carnegie Mellon’s Taya Cohen and Leigh Thompson of Northwestern with University of Toronto’s Geoffrey J. Leonardelli.

◦       Sunk Costs: Participants may wish to achieve any resolution, to derive some sense of value from the invested time and effort,

◦       Image: Participants may wish to be seen as likable,

◦       Erroneous Anchoring: People may assume that their interests and the negotiation partner’s are mutually exclusive.
As a result, they may overlook innovative, “integrative” solutions,

◦       Strength in Numbers: Negotiators who are outnumbered by the opposite negotiation team tend to agree to suboptimal deals.

Geoffrey J Leonardelli

Geoffrey J Leonardelli

Negotiating teams tend to be less susceptible to agreement bias when discussions enter a negative bargaining zone, found Cohen, Thompson, and Leonardelli.

Solo negotiators demonstrated more agreeable behavior, and were more likely to agree to unfavorable conditions.
However, when solo negotiators were joined by only one person, they avoided agreement because they accessed additional decision support.

Douglas Jackson

Douglas Jackson

Agreement bias also occurs in anonymous surveys, reported Douglas Jackson, then of Educational Testing Services and Penn State.
This acquiescence bias, is triggered when people agree to survey items, no matter the content.

Samuel Messick

Samuel Messick

Social desirability concern can contribute to people’s willingness to agree in negotiations, surveys, and life, found  Jackson and his  ETS colleague Samuel Messick in a factor analysis of Minnesota Multiphasic Personality Inventory (MMPI) items.

Robin Pinkley

Robin Pinkley

Likewise, faulty judgments can lead to poor negotiation outcomes like agreement, noted SMU’s Robin L. Pinkley, Terri L. Griffith of Santa Clara University, and University of Illinois’s Gregory B. Northcraft.

Terri Griffith

Terri Griffith

Pinkley’s group demonstrated ineffective outcomes when negotiators:

  • Accurately processed faulty and incomplete information (information availability errors),
  • Inaccurately process valid or complete information (information processing errors).

Gregory Northcraft

Gregory Northcraft

-*How do you guard against agreeing to bad deals?

-*How do reduce the possibility of Information availability errors and information processing errors?

RELATED POSTS:

©Kathryn Welds

Women Balance on the Negotiation Tightrope to Avoid Backlash

Linda Babcock

Women less frequently negotiate initial salaries than men, leading to a long-term wage disparity, argued Carnegie-Mellon University’s Linda Babcock.

Hannah Riley Bowles

In addition, women who negotiate were negatively evaluated by both men and women participants in a lab study, reported Harvard’s Hannah Riley Bowles and Lei Lai.
Likewise volunteers reported less desire to work with women who asked for more money.

Lei Lai

Lei Lai

Both male and female evaluators said they disliked “demandingness” among women who negotiated, and said they preferred “nicer” non-negotiators.
However, reducing women’s degree of assertiveness did not improve evaluators’s perceptions of women negotiators.

These findings support Babcock’s original results:   When male and female volunteers asked for salary increases using identical scripts in controlled lab situations, participants  liked men’s style, but disliked the same words from women.
Women negotiators were considered “aggressive” unless they smiled, or displayed a warm, friendly manner.

The social reaction others had to women negotiators, but not the negotiation outcome, was improved when female participants:

  • Justified the salary request based on a supporting “business case,”
  • Communicated concern for organizational relationships.

However, neither of these tactics used alone or together, improved women’s negotiation outcomes.

Another approach was more effective in improving both social and negation outcomes:

  • Justifying the salary request based on the relationship.

Women who smile and focus on the interpersonal relationship enact role-based expectations, leading to greater comfort with these women negotiators and more favorable assessments by male and female observers.

Kathleen McGinn

Kathleen McGinn

Bowles, with Harvard colleague Kathleen McGinn and Babcock, suggested that “situational ambiguity” and “gender triggers” modify women’s willingness to negotiate.

However, when women have information about the potential salary range and whether the salary is negotiable, they are more likely to negotiate.
This suggests that women can improve their negotiation outcomes by asking:

  • the salary range,
  • which elements of the compensation package are negotiable.

Daniel Pink

Daniel Pink

Effective negotiation is a survival skill, according to Dan Pink:
The ability to move others to exchange what they have for what we have is crucial to our survival and our happiness.
It has helped our species evolve, lifted our living standards, and enhanced our daily lives.

Effective persuaders and “sellers” collaborate in “inspecting” a negotiation and “responding” to the negotiation through “interpersonal attunement.”

Foundational skills for negotiation include Pink’s ABCs:

Attunement: Harmonizing actions and attitudes with others,

Buoyancy:  “Positivity,” optimistic “explanatory style,” asking questions,

Clarity:  Helping others re-assess situations to identify unrecognized needs that can be fulfilled by the negotiation proposal.

Joan Williams

Joan Williams

UC Hastings College of the Law’s Joan Williams offered strategies to address documented wage discrepancies.

As more women negotiate salaries, managers may view this as an expected practice.

  • What is the best negotiation pitch you’ve heard for a job-related salary increase or role promotion?
  • How did the person overcome objections?
  • How did the person manage the relationship with the negotiating partner?

Related Posts

©Kathryn Welds

“Everything is Negotiable”: Prepare, Ask, Revise, Ask Again

Anna Beninger

Anna Beninger

Alixandra Pollack

Alixandra Pollack

Women generally negotiate salaries less frequently than men,  reflected in persistent compensation gaps for women MBA graduates from 26 leading business schools in the United States, Canada, Europe, and Asia, reported Catalyst’s Anna Beninger and Alixandra Pollack.

Women still earn about 80 percent of their male peers’ compensation in a study of salaries in academic medicine by Harvard’s Catherine DesRoches, Sowmya Rao, Lisa Iezzoni, and Eric Campbell with Darren Zinner of Brandeis.

Catherine DesRoches

Likewise, Carnegie Mellon’s Linda Babcock reported that women MBAs earn USD $500,000 – USD $2 million less than their male classmates over their careers because because men are four to eight times more likely to negotiate both salary and promotions, and achieve better results in most negotiations.

Babcock, with Sara Laschever, outlined precursors of these negotiation differences based on gender socialization.

Linda Babcock

They posited that many parents encourage boys to take risks, earn money in part-time jobs, and participate in competitive team sports.
In contrast, parents are more likely to encourage girls to play collaboratively and value interpersonal affiliation.

These practices enable boys to negotiate and compete, and to tolerate disrupted interpersonal relationships, according to Babcock and Laschever.

John List

John List

Their assertion was reinforced by findings that the gender-based wage gap is associated with women not negotiating salaries and preferring less competitive work roles, in research by University of Chicago’s John List, Andreas Leibbrandt, and Jeffrey Flory.

These researchers posted two identical job ads on internet job boards with different wage structures:  One offered hourly pay whereas the other had pay dependent on performance compared with coworkers.
More women than men applied to the hourly wage role.

Andreas Leibbrandt

Andreas Leibbrandt

Men were 94 percent more likely than women to seek and perform well in competitive work roles in a study of nearly 7,000 job seekers across 16 large American cities.
This gender gap “more than doubled” when the reward for performance rose.
Women were significantly more likely to walk away from a competitive workplace when they had alternate employment options.

Jeffrey Flory

Jeffrey Flory

In contrast, women were more likely to apply to jobs if the performance relied on teamwork rather than individual accomplishment, or if the salary was a flat fee independent of their performance.

Men were also more likely to negotiate when there was no explicit statement that wages are negotiable.
However, this difference reversed when women had “permission” to ask for higher salaries and job titles.

Negotiation practices generally judged “acceptable” for men are often assessed as “overly aggressive” when women use them, according to Babcock.
To counteract this stereotype, she and Laschever advised women to:

  • Define personal goals, acknowledging that “everything is negotiable,”
  • Research personal “market worth” in comparative job using online resources like Salary.com and Glassdoor.com,
  • Consider oneself entitled to higher salaries and job roles,
  • Challenge anxiety about negotiation,
  • Plan negotiation rationale, citing specific accomplishments, results, value to the organization,
  • Practice a positively-stated, confident negotiation “pitch,” offer timing, set an advantageous anchor point, and provide counterarguments to mitigate objections,
  • Plan counter-offers and self-supporting thoughts to manage anxiety while maintaining negotiation position and interpersonal rapport.

Collaborative negotiation enables both people to derive value from the negotiation conversation through courage, comfort, skill, stamina, and strength while focusing on the negotiation goal and delivering value for all parties.

Foundational negotiation principles were summarized in Getting to Yes: Negotiating without Giving In by Harvard’s Roger Fisher and William Ury.
More recently, Ohio State’s Roy Lewicki, David Saunders of Queen’s University, and Vanderbilt’s Bruce Barry of Vanderbilt detailed their research-based guide to Negotiation.

Leigh Thompson

Leigh Thompson

More than 90% of all negotiators fail to ask “diagnostic questions” that uncover the negotiation partner’s most important needs, priorities, preferences, and even fears, found Leigh Thompson of Northwestern.
Eliciting this information is associated with significantly improved negotiation outcomes, she found.

Knowing Your ValueTelevision journalist Mika Brzezinski echoed Babcock and Laschever’s recommendations based on interviews with prominent women and men about the persistent gender wage gap.
She distilled disconcerting labor statistics and suggested a model for negotiation:

  • Research,
  • Leverage,
  • Negotiate,
  • Re-negotiate.Hardball for Women

Pat Heim

Pat Heim

Women’s reluctance to negotiate may be related to gender differences in attributions of success and failure, suggested Pat Heim.
Women attribute failures to themselves (“internalizing,” “taking it personally) whereas men identify external factors (“blaming”, “rationalizations”) associated with their shortcomings.
In contrast, women attribute success to external factors (“deflection of merit”). Men typically attribute their effective performance to to themselves (“self-bolstering”).

Men are often promoted because they are seen to have “potential,” whereas women are  promoted based on their results and accomplishments, noted Heim.
Even factors like attire can influence perception of authority:   Men judged women as less authoritative when wearing “business casual” attire.

Women can systematically develop skills and behaviors required to close the well-documented wage gap between professional women and men.

-How do you prepare for negotiations and overcome objections during negotiations?

©Kathryn Welds

Range Offers vs Point Offers in Negotiation for Advantageous Settlements

Daniel Ames

Daniel Ames

Many people hesitate to present a negotiation offer as a range of values, assuming that co-negotiators will anchor on the lower value in the range as a “reservation price.” 

This is based on the power of first offers as negotiation anchors, demonstrated in research by University of Chicago’s Nicholas Epley and Thomas Gilovich of Cornell.

Malia F Mason

Malia F Mason

Contrary to this expectation, range offers actually led to stronger outcomes in controlled studies by Columbia University’s Daniel R. Ames and Malia F. Mason. These researchers suggested that range offers provide “dual anchors” that signal a negotiator’s knowledge of value as well as politeness.

Nicholas Epley

Nicholas Eple

In addition, negotiator credibility, interpersonal style, and value awareness increase an anchor potency’s to 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, which 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.
    This approach is recommended based on this research.
  • Backdown range, which 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 generally not recommended.
  • Bracketing range, which spans the target point offer and tends to have neutral settlement outcomes for the offer-maker.
    Compared with point offers, bracketing range offers provided some relational benefits because they were seen as less aggressive.

Martin Schweinsberg

Martin Schweinsberg

Extreme anchors can be seen as offensive, 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.
In fact, 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 the current research shows the value of range offers.

Mason and team argued that point offers and range offers are independent and interactive informational processes with influence on 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, non-rounded negotiation offers instead of a negotiation range?

RELATED POSTS:

©Kathryn Welds

Nothing to Lose: Effective Negotiating Even When “Powerless”

Michael Schaerer

Most negotiators prefer to have a “fall back position.”
However, having no alternatives and less power than co-negotiators can improve outcomes, found INSEAD’s Michael Schaerer and Roderick Swaab with Adam Galinsky of Columbia.

Alternatives enable negotiators to gain concessions from co-negotiators because they have a BATNA – Best Alternative To a Negotiated Agreement, defined by Harvard’s Roger Fisher and William Ury.

Roger Fisher

Roger Fisher

When an alternative is weak, it can undermine negotiating outcomes more than having no alternative because it establishes an “anchor point” based on competing options.

Anchoring is a frequent cognitive bias characterized by overvaluing one piece of information, according to Hebrew University’s late Amos Tversky and Daniel Kahneman of Princeton.

William Ury

William Ury

Negotiators usually anchor on the value of alternatives when making a first offer, and people with weak alternatives generally make lower first offers than those with no alternative.
“Lowball” first offers based on few or poor alternatives usually undermine a negotiator’s final outcome.

Professional athletes and their agents provide examples of negotiating better deals when they have no “back up” offers and “nothing to lose,” so they can set ambitious anchor points.

Amos Tversky

Amos Tversky

In a separate study, Schaerer and team asked a hundred people whether they would prefer to negotiate a job offer with a weak alternative or without any alternative.
More than 90 percent of participants preferred an unattractive alternative offer, confirming the popular assumption that any alternative is  better than no alternative.

Another of Schaerer’s lab studies asked volunteers to imagine selling a used music CD by The Rolling Stones.
Participants were randomly assigned to three groups which received different information about their negotiation situations:

  • No offers (no alternative),
  • One offer at USD $2 (weak alternative),
  • A bid at USD $8 (strong alternative).

Roderick Swaab

Roderick Swaab

Volunteers in each group proposed a first offer, and rated the degree of power they felt.
Not surprisingly, people with the strong alternative felt the most powerful and those with no alternative felt the least powerful.

However, people with a weak alternative felt more powerful than those with no alternative, but they made lower first offers, signaling less confidence than participants with no alternative.
Having any alternative can help people feel powerful but can undermine negotiation performance.

Schaerer’s team explored this paradox by pairing a  “seller,” who offered a coffee mug during a face-to-face meeting, and a potential “buyer.”

Adam Galinsky

Adam Galinsky

Before the meeting, the seller received a phone call from “another buyer,” who was actually a confederate of the researchers.
For half of the “sellers,” the potential buyer either made a low offer or declined to bid.

“Sellers” without an alternative offer said they felt less powerful, but made higher first offers and received significantly higher sales prices than negotiators with an unattractive alternative.

In another situation, half of the “sellers” concentrated on available alternatives (none, weak, or strong) and the remaining negotiators focused on the target price.

Volunteers with unappealing alternatives negotiated worse deals than those with no options when they focused on alternatives.
“Sellers” avoided this pitfall by concentrating on the target price.
These findings support the benefit of focusing on the goal when alternatives are weak, and the power of first-offer anchors.

Negotiators with non-existent or unappealing alternatives can beware of making cautious first offers when they feel powerless.
Instead, negotiators can set audacious goals and make an ambitious opening offer because they have the benefit of “nothing to lose.”

  • How do you overcome lowball anchoring when you have few negotiation alternatives?

RELATED POSTS:

©Kathryn Welds

“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.

Y Charles Zhang

Y Charles Zhang

Negotiators can improve their outcomes by specifying offers in precise values.
Precise first offers more potently anchored the negotiation range than round number proposals, and people who proposed precise offers were perceived as more confident, credible, and “well-informed” regarding actual value.

Norbert Schwartz

Norbert Schwartz

Similarly, consumers have 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.

A drawback of precise offers is that some co-negotiators perceive them as “inflexible.
Despite this risk, 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 precise offer.

Martin Schweinsberg

Martin Schweinsberg

Another benefit of precise offers is that they are less likely to be seen as aggressive or greedy 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 lead an impasse or stalled progress toward settlement if a negotiation partner takes offense or walks away from talks.

Gillian Ku

Gillian Ku

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

Manoj Thomas

Manoj Thomas

Precise offers may obscure their actual value, found 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, and volunteers said they would follow this strategy in buying a home.

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?

RELATED POSTS:

©Kathryn Welds