Tag Archives: Thomas Gilovich

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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Buying Happiness: Satisfaction and Material Purchases vs. Experiential “Investments”

-*Does acquiring possessions lead to happiness and satisfaction?

Leaf Van Boven

Leaf Van Boven

“Not so much,” according to University of Colorado’s Leaf Van Boven and Thomas Gilovich of Cornell, who reported that material purchases are less satisfying than experiential purchases.

Thomas Gilovich

Thomas Gilovich

They suggest that experiences make people happier because experiences are:

  • Subject to positive reinterpretation
  • Central to one’s identity
  • More positively valued by others as having “social value.”
Travis Carter

Travis Carter

Gilovich collaborated with Travis Carter of University of Chicago to survey diverse respondents from various demographic groups.
These two cross-sections of the public reported that purchases to acquire a life experience made them happier than “hedonic” or “utilitarian” material purchases.

In Gilovich and Carter’s related lab experiment, volunteers said they had more positive feelings after recalling an experiential purchase than after thinking about a material purchase.

Eunice Kim

Eunice Kim

Participants also expected that experiences would make them happier than material possessions when they adopted a future, “big picture” perspective in contrast to a present-oriented view.
This finding echoes Eunice Kim Cho and team’s decision-making conclusions highlighted in the last blog postReframing Non-Comparable Choices to Make Them Simpler, More Satisfying

Volunteers reported that material purchases are less satisfying because they can lead to focusing on unchosen options, and comparing to other people’s choices, which contributes to doubt and rumination about alternate choices.

Russell Belk

Russell Belk

In addition, most people “maximize” when they make material purchases in an exhaustive, time-consuming process of considering all possible options, then selecting the optimal-seeming alternative.

Marsha Richins

Marsha Richins

In contrast, most people “satisfice” when selecting experiences by setting a minimum standard for decision quality, then selecting the first option.
This more rapid approach typically leads to less regret.

Scott Dawson

Scott Dawson

People who strongly agree with statements like “Some of the most important achievements in life include acquiring material possessions” and “Buying things gives me a lot of pleasure” report lower levels of life satisfaction according to York University’s Russell Belk as well as to University of Missouri’s Marsha Richins and Scott Dawson of Portland State University, in separate studies.

Many people intuitively sense that possessions don’t buy happiness, and these studies confirm that life experiences tend to be more satisfying than material objects.

-*How do you choose among “utilitarian” items, experiences, and “hedonic” possessions when making purchases?

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