Abstract People habitually use round prices as first offers in negotiations. We test whether the specificity with which a first offer is expressed has appreciable effects on first-offer recipients' perceptions and strategic choices. Studies 1a–d establish that first-offer recipients make greater counteroffer adjustments to round versus precise offers. Study 2 demonstrates this phenomenon in an interactive, strategic exchange. Study 3 shows that negotiators who make precise first offers are assumed to be more informed than negotiators who make round first offers and that this perception partially mediates the effect of first-offer precision on recipient adjustments. First-offer recipients appear to make assumptions about their counterpart's language choices and infer meanings that are not explicitly conveyed. Precise numerical expressions imply a greater level of knowledge than round expressions and are therefore assumed by recipients to be more informative of the true value of the good being negotiated.
The same quantity can be expressed at different levels of granularity, for example, "1 year," "12 months," or "365 days." Consumers attend to the granularity chosen by a communicator and draw pragmatic inferences that influence judgment and choice. They consider estimates expressed in finer granularity more precise and have more confidence in their accuracy (studies 1-4). This effect is eliminated when consumers doubt that the communicator complies with Gricean norms of cooperative conversationa...
Most research suggests that negotiators gain value by making first offers in negotiations. The current research examines the proposition that extreme first offers offend their recipients and cause them to walk away, resulting in an impasse. Results across two experiments support this proposition. As a result, extreme offers can be risky: even though they can anchor counteroffers and final outcomes, bringing benefit to the offerer, they only do so when impasses are avoided. In addition, we find s...
Last. Leif D. Nelson(University of California, Berkeley)H-Index: 38
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Increasing accuracy motivation (e.g., by providing monetary incentives for accuracy) often fails to increase adjustment away from provided anchors, a result that has led researchers to conclude that people do not effortfully adjust away from such anchors. We challenge this conclusion. First, we show that people are typically uncertain about which way to adjust from provided anchors and that this uncertainty often causes people to believe that they have initially adjusted too far away from such a...
Last. Vrinda Kadiyali(SPbU: Saint Petersburg State University)H-Index: 19
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We examine two questions: Does the roundness or precision of prices bias magnitude judgments? If so, do these biased judgments affect buyer behavior? Results from five studies suggest that buyers underestimate the magnitudes of precise prices. We term this the precision effect. The first three studies are laboratory experiments designed to test the existence of the precision effect and examine the underlying psychological processes. In Study 1, we find that precise prices are judged to be smalle...
The anchoring-and-adjustment heuristic has been used to account for a wide variety of numerical judgments. Five studies show that adjustment away from a numerical anchor is smaller if the anchor is precise than if it is rounded. Evidence suggests that precise anchors, compared with rounded anchors, are represented on a subjective scale with a finer resolution. If adjustment consists of a series of iterative mental movements along a subjective scale, then an adjustment from a precise anchor shoul...
Researchers often conduct mediation analysis in order to indirectly assess the effect of a proposed cause on some outcome through a proposed mediator. The utility of mediation analysis stems from its ability to go beyond the merely descriptive to a more functional understanding of the relationships among variables. A necessary component of mediation is a statistically and practically significant indirect effect. Although mediation hypotheses are frequently explored in psychological research, for...
Three experiments explored the role of first offers, perspective-taking, and negotiator self-focus in determining distributive outcomes in a negotiation. Across 3 experiments, whichever party, the buyer or seller, made the 1 st offer obtained a better outcome. In addition, 1st offers were a strong predictor of final settlement prices. However, when the negotiator who did not make a 1 st offer focused on information that was inconsistent with the implications of the opponent's 1st offer, the adva...
People's estimates of uncertain quantities are commonly influenced by irrelevant values. These anchoring effects were originally explained as insufficient adjustment away from an initial anchor value. The existing literature provides little support for the postulated process of adjustment, however, and a consensus that none takes place seems to be emerging. We argue that this conclusion is premature, and we present evidence that insufficient adjustment produces anchoring effects when the anchors...
T he authors exam ined how gender stereotypes affect negotiation perform ance. M en outperform edw om en w hen the negotiation w as perceived as diagnostic of ability (E xperim ent 1) or the negotiation w aslinked to gender-specific traits (E xperim ent 2), suggesting the threat of negative stereotype confirm ationhurt w om en's perform ance relative to m en. T he authors hypothesized that m en and w om en confirmgender stereotypes w hen they are activated im plicitly, but w hen stereotypes are ...
#1Ilan Yaniv(HUJI: Hebrew University of Jerusalem)H-Index: 26
#2Dean P. Foster(UPenn: University of Pennsylvania)H-Index: 53
Whereas probabilistic calibration has been a central normative concept of accuracy in previous research on interval estimates, we suggest here that normative approaches for the evaluation of judgmental estimates should consider the communicative interaction between the individuals who produce the judgments and those who receive or use them for making decisions. We analyze precision and error in judgment and consider the role of the accuracy‐informativeness trade-oA (Yaniv and Foster, 1995) in th...
Abstract Food waste has become a pressing problem in the world, leading to a range of economic, social, and environmental issues. As a result, there are increasing calls to develop effective messages that can increase consumer awareness of food waste and its negative impacts. Drawing upon a recent research on the influences of numerical precision on consumer decision making, the present research tests the ‘match-up’ effects between numerical precision and message framing on consumer awareness of...
#2Timothy Gubler(BYU: Brigham Young University)H-Index: 5
Last. Lamar Pierce(WashU: Washington University in St. Louis)H-Index: 23
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Buyers often strive to negotiate low prices for durable goods, such as vehicles, homes, appliances, or art. Psychologically-salient round number reference points (e.g., $10,000) influence these purchasing decisions. However, existing research does not capture how these round-number reference points from the past influence the anchoring effect of previous sales prices on future resale valuations. We argue that the anchoring effect of prior sales prices on subsequent prices of durable goods is dis...
In this study, I use an experiment to investigate the joint effects of forecast precision and forecast uncertainty on investors’ judgments of the reliability of analysts’ EPS forecasts. Results indicate that participants’ judgments of forecast reliability are not influenced by forecast uncertainty when precise analyst EPS forecasts are presented. In contrast, participants’ judgments of forecast reliability are higher when forecast uncertainty is low than when it is high when round forecasts are ...
Abstract Having attractive alternatives is often seen as a sine qua non for negotiator success. Given that alternatives are not set in stone and are thus inherently probabilistic in nature, what happens if an alternative is lost? Across seven experiments (N = 2538), we demonstrate that losing an attractive alternative carries advantages compared to never having had this alternative. Specifically, negotiators who lose an attractive alternative set more aggressive aspirations, first offers, and ob...
Abstract We compare the impact of round and non-round numbers used in a communication message on consumers’ evaluations and judgments towards the associated target entity. We find that the use of non-round numbers, in contrast to round numbers, in a message frame results in increased attention to numerical values, which further leads to a comparison of the associated measures with ideal reference points. This leads to an increased framing effect in the non-round numbers condition compared to the...