Imagine yourself in a dilemma that only a privileged few experience: You’ve fallen in love with a dazzling, one-of-a-kind home that’s on the market without a list price. Instead, the seller’s broker encourages you to name your price. You’re unsure how much to offer—yet desperate to win the prize.
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price anchoring
The following items are tagged price anchoring:
Price Anchoring 101
Opening offers have a strong effect in price negotiations. The first offer typically serves as an anchor that strongly influences the discussion that follows. In research documenting price anchoring, psychologists Daniel Kahneman and Amos Tversky found that even random numbers can have a dramatic impact on people’s subsequent judgments and decisions.
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Negotiation Research You Can Use: For Effective Price Anchoring, Strive for Precision
The party that makes the first offer in a negotiation generally gets the best deal, multiple negotiation studies suggest. The first offer presented serves as an anchor that draws subsequent offers in its direction.
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Using Integrative Negotiation Techniques to Close the Deal
Like a contingency, a condition to a deal is a related though far less common deal-structuring technique. A condition is an ‘if’ statement like a contingency, but, whereas a contingency depends on unknown future events, a condition is entirely within the control of the parties involved.
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When First Offers Fail In a Negotiation
In negotiation, the party who makes the first offer often gets the lion’s share of the value. That can be due to the anchoring effect, or the tendency for first offers to “anchor” the bargaining that follows in its direction, even if the offer recipient thinks the offer is out of line.
Yet plenty of times, … Read When First Offers Fail In a Negotiation
Effective Negotiation Techniques: Strive for a Precision Advantage
As you may have noticed, the first offer made in a negotiation often has a significant influence on the final outcome. In their research, psychologists Daniel Kahneman and Amos Tversky documented that the first number introduced in a negotiation serves as an “anchor” that can be impossible to ignore—no matter how irrelevant, outrageous, or insulting … Read More
The Anchoring Bias Can Get Talks off to a Strong Start
Should you make the first offer in a negotiation? Typically yes, abundant research on the anchoring bias suggests. What is anchoring in negotiation? In negotiations centered on price or another figure, the party who moves first typically benefits by “anchoring” the discussion that follows on her offer—even if the anchor is arbitrary. For example, the … Read More