BazermanMoore

Anchoring in Negotiations 177
separately a group of undergraduate students, to estimate the value of an actual house.
Both brokers and students were randomly assigned to one of four experimental groups.
In each group, all participants were given a ten-page information packet about the
house being sold, which included considerable information about the house, as well as
data on prices and characteristics of recently sold homes in the area. The only difference
in the information given to the four groups was the house’s listing price, which
was listed as þ11 percent, þ4 percent, 4percent,or 11percentoftheactual
appraised value of the property. After reading the material, all participants toured the
house and the surrounding neighborhood. Participants were then asked to estimate the
house’s true value. The values estimated by both the brokers and the students suggest
that both groups were significantly and strongly affected by the listing price (the
anchor). While the students readily admitted the role that the listing price had played
in their decision-making process, the brokers flatly denied their use of the listing price
as an anchor—despite the evidence to the contrary.
Ritov (1996) found that even very subtle shifts in how negotiations are anchored
can create big differences in final outcomes. In her study, she varied whether buyers
and sellers in a simulation were looking at possible agreements in an order that moved
from best-for-the-buyer to best-for-the-seller, or in an order that moved from the bestfor-the-seller
to best-for-the-buyer. She found surprisingly big effects, such that
negotiators ended up closer to the end of the bargaining zone that corresponded with
the starting point (the price listed at the top of the page). As a simplified example,
Ritov’s research suggests that if possible prices are listed as $1,000, $800, $600, $400,
$200, and $0, a higher price will result, on average, than if possible prices are listed as
$0, $200, $400, $600, $800, and $1,000. In addition, Ritov found that the first offer is
positively correlated with the final outcome, a phenomenon that we will explore below.
In negotiation, one party must make the first offer. Should it be the buyer or the
seller? Should it be you or the other side? Oesch and Galinsky (2003) show that negotiators
with good alternatives are more likely to make the first offer than are those with
poor alternatives. Similarly, low-power negotiators are less likely to make the first offer
than are high-power negotiators. Oesch and Galinsky also find that more extreme offers
lead to better deals for those making such offers, but that this benefit comes at the
expense of increasing the likelihood of an impasse. While first offers have the power to
anchor the negotiation, unreasonable first offers can scare away the other side. Ideally,
an effective first offer will seem reasonable to the other side, while also being close to
your preferred end of the bargaining zone.
Galinsky and Mussweiler (2001) show that first offers have a strong anchoring effect
when great ambiguity exists. If your opponent has a good sense of the bargaining
zone or knows what the item is worth to him or her, your first offer will have little value.
However, when your opponent lacks information, he or she may actually make inferences
about the value of the object based on your first offer.
How can you protect yourself from first offers that benefit your opponent at your
expense? Galinsky and Mussweiler (2001) show that your opponent’s first offer will
have little effect on you if you focus on your own alternatives and your own objectives.
While we learn a great deal in the process of negotiation, we should avoid learning from
the potential manipulative effect of the other side’s first offer.