Project

Anchor Precision in Negotiations

Goal: The project examines the anchoring impact of precise versus round first offers at the bargaining table. A meta-analysis seeks to quantify the overall anchor precision effect and qualifying moderators, several empirical studies examine competing underlying processes and boundary conditions that cause overly precise anchors to backfire.

Updates
0 new
0
Recommendations
0 new
0
Followers
0 new
19
Reads
0 new
220

Project log

David D. Loschelder
added a research item
In negotiations, higher first offers from sellers drive up sale prices—reversely, buyers benefit from lower first offers. Whereas abundant research has replicated this robust anchoring effect of opening offers, little is known about the impact of anchors’ precision or the interplay of extremity and precision. We propose that precision moderates the effect of anchor extremity, in that precise anchors gain in plausibility and thereby magnify the first-mover advantage. Two experiments tested this assumption. Study 1 shows that increasing precision strengthens the anchoring potency of first offers—sellers assimilate more to strong and precise anchors, which ultimately results in a particularly pronounced first-mover advantage. Study 2 replicates this moderating effect for buyers and indicates that an increased plausibility of precise anchors accounts for the findings. Implications for anchor theorizing, negotiation research, and the first minutes at a bargaining table are discussed.
David D. Loschelder
added a research item
A negotiation commonly starts with one party sending and the counterpart receiving a first offer. This first offer anchors recipients and yields higher profits to the sender. Recent research has shown that precise anchors ($28.75) – those fea- turing fewer trailing zeros – are more potent than round anchors ($30.00). The present studies extend this literature in two ways: First, prior research has exclusively focused on anchor recipients while ignoring the sender. Here, we examine precision effects for (1) recipients, (2) senders, and (3) both recipients and senders in a dyadic negotiation. Three experi- ments establish distinct and opposing effects: Whereas increasing precision elevates a first offer's anchoring potency for recipients, it lowers the first-offer extremity that senders opt for. Second, prior research has disagreed upon the theoretical mechanisms behind the precision effect: The scale-granularity account posits that decision-makers adjust in smaller steps on a finer-grained mental scale. The attribution-of-competence account posits that people ascribe more competence to a precise-opening individual. We examine these competing theoretical accounts simultaneously. Multiple mediation analy- ses across all three experiments suggested consistently that the beneficial impact of precise anchors on recipients is due to a social attribution-of-competence, whereas the detrimental impact on anchor-senders is due to a cognitive scale-gran- ularity process. In all, the present findings show (a) that senders and recipients are distinctly affected by anchor precision, and (b) that these opposing effects are due to distinct psychological processes.
David D. Loschelder
added a research item
Past research has suggested a fundamental principle of price precision: The more precise an opening price, the more it anchors counteroffers. The present research challenges this principle by demonstrating a too-much-precision effect. Five experiments (involving 1,320 experts and amateurs in real-estate, jewelry, car, and human-resources negotiations) showed that increasing the precision of an opening offer had positive linear effects for amateurs but inverted-U-shaped effects for experts. Anchor precision backfired because experts saw too much precision as reflecting a lack of competence. This negative effect held unless first movers gave rationales that boosted experts’ perception of their competence. Statistical mediation and experimental moderation established the critical role of competence attributions. This research disentangles competing theoretical accounts (attribution of competence vs. scale granularity) and qualifies two putative truisms: that anchors affect experts and amateurs equally, and that more precise prices are linearly more potent anchors. The results refine current theoretical understanding of anchoring and have significant implications for everyday life.
David D. Loschelder
added a project goal
The project examines the anchoring impact of precise versus round first offers at the bargaining table. A meta-analysis seeks to quantify the overall anchor precision effect and qualifying moderators, several empirical studies examine competing underlying processes and boundary conditions that cause overly precise anchors to backfire.