“€14,875?!”: Precision Boosts the Anchoring Potency of First Offers

Abstract

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.

Attitudes on the Size of Unemployment Benefits: Ideology and Numbers

“…Whenever respondents are presented with a precise, rather than a rounded number, their stated preferences end up closer to that number. This finding aligns well with previous studies on the price precision effect (e.g., Loschelder et al ). However, using precise numbers had no significant effect on the respondents’ perception of the sender’s seriousness and knowledge.…”

“…Substantially, these numbers differ by approximately just 1 percent, and one could argue that such a small difference is unimportant from a policy perspective. However, several studies on the psychology of negotiations and appraising suggest that the difference in precision may have an effect on how voters respond to these numbers because precise numbers serve as stronger anchors than round numbers (Loschelder et al ). For example, real estate listed with a precise list price tends to sell at a price closer to this list price than real estate listed with a round price (Janiszewski & Uy ; Thomas et al ).…”

“…However, several later studies indicate that the potency of precise numbers may also be due to the signal that such numbers send about the individual offering the number. Specifically, precise numbers tend to be seen as more informed and reasoned than round ones because precision conveys an impression of confidence and expertise (Mason et al ; Jerez‐Fernandez et al ; Loschelder et al ) . Hence, whenever people use precise numbers, we tend to assume that they have good reasons for doing so (Zhang & Schwarz ).…”

The Effect of Colour on the Anchoring Heuristic in Consumer Decision Making

“…This means that the participants' numeric estimation was affected by the anchor, the roulette ball number. Later studies also confirmed the effect of an anchoring (Hess & Orbe 2013;Loschelder, Stuppi, & Trötschel, 2013;Clepce, Neumann, Martus, Nitsch, Wielopolski, Koch, Kornhuber, Reich, & Thuerauf, 2014). That is to say, when people try to answer a question that they do not know the answer to, they tend to be affected either consciously or subconsciously by the anchor, which is not related to the question.…”

Confidently Biased: Comparisons with Anchors Bias Estimates and Increase Confidence

“…Numerous studies have demonstrated that in negotiations, first offers can act as anchors (e.g., Galinsky & Mussweiler, ; Galinsky, Ku, & Mussweiler, ; Loschelder, Stuppi, & Trötschel, ). Specifically, the outcomes of the negotiations are often biased in the direction of the first offers.…”