Too precise to pursue: How precise first offers create barriers-to-entry in negotiations and markets
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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in: Organizational Behavior and Human Decision Processes, Jahrgang 148, 01.09.2018, S. 87-100.
Publikation: Beiträge in Zeitschriften › Zeitschriftenaufsätze › Forschung › begutachtet
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TY - JOUR
T1 - Too precise to pursue
T2 - How precise first offers create barriers-to-entry in negotiations and markets
AU - Lee, Alice J.
AU - Loschelder, David D.
AU - Schweinsberg, Martin
AU - Mason, Malia F.
AU - Galinsky, Adam D.
PY - 2018/9/1
Y1 - 2018/9/1
N2 - Prior research shows that precise first offers strongly anchor negotiation outcomes. This precision advantage, however, has been documented only when the parties were already in a negotiation. We introduce the concept of negotiation entry, i.e., the decision to enter a negotiation with a particular party. We predict that precise prices create barriers-to-entry, reducing a counterpart's likelihood of entering a negotiation. Six studies (N = 1580) and one archival analysis of real estate data (N = 11,203) support our barrier-to-entry prediction: Potential negotiators were less likely to enter a negotiation with precise- versus round-offer makers. Using both statistical mediation and experimental-causal-chain analyses, we establish that perceptions of offer-maker inflexibility underlie the precision barrier. Furthermore, we demonstrate that the precision mechanism (inflexibility) is distinct from the extremity mechanism (being offended) that produces barriers-to-entry from extreme first offers. The discussion theoretically integrates research on first-offer precision and extremity by offering the Precision-Extremity Model of First Offers.
AB - Prior research shows that precise first offers strongly anchor negotiation outcomes. This precision advantage, however, has been documented only when the parties were already in a negotiation. We introduce the concept of negotiation entry, i.e., the decision to enter a negotiation with a particular party. We predict that precise prices create barriers-to-entry, reducing a counterpart's likelihood of entering a negotiation. Six studies (N = 1580) and one archival analysis of real estate data (N = 11,203) support our barrier-to-entry prediction: Potential negotiators were less likely to enter a negotiation with precise- versus round-offer makers. Using both statistical mediation and experimental-causal-chain analyses, we establish that perceptions of offer-maker inflexibility underlie the precision barrier. Furthermore, we demonstrate that the precision mechanism (inflexibility) is distinct from the extremity mechanism (being offended) that produces barriers-to-entry from extreme first offers. The discussion theoretically integrates research on first-offer precision and extremity by offering the Precision-Extremity Model of First Offers.
KW - Anchor precision
KW - Barriers-to-entry
KW - Decision making
KW - First offers
KW - Negotiation entry
KW - Social attribution
KW - Psychology
KW - Business psychology
UR - http://www.scopus.com/inward/record.url?scp=85050943080&partnerID=8YFLogxK
U2 - 10.1016/j.obhdp.2018.03.001
DO - 10.1016/j.obhdp.2018.03.001
M3 - Journal articles
AN - SCOPUS:85050943080
VL - 148
SP - 87
EP - 100
JO - Organizational Behavior and Human Decision Processes
JF - Organizational Behavior and Human Decision Processes
SN - 0749-5978
ER -