TY - JOUR

T1 - How and Why Different Forms of Expertise Moderate Anchor Precision in Price Decisions

T2 - A Pre-Registered Field Experiment

AU - Frech, Marie-Lena

AU - Loschelder, David D.

AU - Friese, Malte

PY - 2019/3

Y1 - 2019/3

N2 - Increasing price precision leads to linearly stronger anchoring effects for amateurs, but highly precise anchors can backfire for experts. Previous research focused on experts bargaining about an object within their expertise domain (e.g., real-estate agents negotiated about a house listed at €978,781.63). This leaves unknown whether too much precision backfires for experts because of their (a) general negotiation expertise, (b) domain-specific pricing knowledge, or (c) the combination of general expertise and price-knowledge. Our pre-registered report seeks to replicate the too-much-precision effect and to experimentally separate general negotiation expertise from domain-specific price-knowledge. Seasoned experts (real-estate agents) negotiate about an object either within (house) or outside (motor yacht) their domain of expertise. We measure experts' willingness to pay (WTP), counteroffer, self-ascribed versus other-ascribed competence, and their self-ascribed versus other-ascribed price-knowledge. Based on responses of 400 professional real-estate agents, we replicate the advantageous anchor precision effect and illustrate that too much precision backfires regardless of whether agents negotiate within (house) or outside (yacht) their domain of expertise. Mediation analysis suggests that, consistent with previous research, the impact of precise anchors is due to the competence attributed to the negotiation opponent. Our results offer insights into the psychological mechanisms and theoretical understanding of anchor precision.

AB - Increasing price precision leads to linearly stronger anchoring effects for amateurs, but highly precise anchors can backfire for experts. Previous research focused on experts bargaining about an object within their expertise domain (e.g., real-estate agents negotiated about a house listed at €978,781.63). This leaves unknown whether too much precision backfires for experts because of their (a) general negotiation expertise, (b) domain-specific pricing knowledge, or (c) the combination of general expertise and price-knowledge. Our pre-registered report seeks to replicate the too-much-precision effect and to experimentally separate general negotiation expertise from domain-specific price-knowledge. Seasoned experts (real-estate agents) negotiate about an object either within (house) or outside (motor yacht) their domain of expertise. We measure experts' willingness to pay (WTP), counteroffer, self-ascribed versus other-ascribed competence, and their self-ascribed versus other-ascribed price-knowledge. Based on responses of 400 professional real-estate agents, we replicate the advantageous anchor precision effect and illustrate that too much precision backfires regardless of whether agents negotiate within (house) or outside (yacht) their domain of expertise. Mediation analysis suggests that, consistent with previous research, the impact of precise anchors is due to the competence attributed to the negotiation opponent. Our results offer insights into the psychological mechanisms and theoretical understanding of anchor precision.

KW - judgment

KW - anchoring

KW - precision

KW - negotiation

KW - experts

KW - first offers

KW - Business psychology

UR - http://www.scopus.com/inward/record.url?scp=85065125020&partnerID=8YFLogxK

U2 - 10.1027/1618-3169/a000441

DO - 10.1027/1618-3169/a000441

M3 - Journal articles

C2 - 31044670

VL - 66

SP - 165

EP - 175

JO - Experimental Psychology

JF - Experimental Psychology

SN - 1618-3169

IS - 2

ER -