Page 192 - DMGT519_Conflict Management and Negotiation Skills

Conflict Management and Negotiation Skills

Notes The decision as to who should make the opening move often generates uncertainty and anxiety
amongst negotiators. This is particularly true when they are missing reliable information about
the other party. This will cause them to feel unsure about what offer that party will accept and
what offer is likely to cause the other party to walk away from the negotiation. Additionally, it
is also possible that the other party could deliberately respond with false information to gain a
negotiation advantage.
Given that most negotiations are somewhat unclear at the outset, one school of thought believes
that the opening offer should therefore preferably come from the other party. The basis behind
this thinking is that an opening offer provides valuable information about a party’s negotiating
position. It also provides an indication of what type of agreement would be satisfactory. Although
this appears to be good advice, it unfortunately fails to consider the critical influence first offers
have on how negotiators consider the negotiation process. Reputable psychological research
strongly suggests that negotiators who make first offers often attain better results.

Anchoring a Negotiation

Research has confirmed that the way negotiators perceive the value of any offer made in a
negotiation powerfully correlates to any number affiliated with that offer. Given that numbers
related to an offer tend to have a magnetic influence on the judgment of negotiators, these
numbers are referred to as anchors.
First offers have a vigorous anchoring impact in situations of great fluidity and doubt, as in the
case with many negotiations. First offers maintain a strong authority throughout the negotiation.
This influence is so powerful that even negotiators who are aware of the hypnotic allure of
anchors in terms of their judgment are often unable to resist this influence. Therefore, their
assessment of a first offer seldom breaks out of the field of influence of such anchors.
Greg Northcraft and Margaret Neale researched the phenomenon of anchors. In an experiment
they supplied real estate agents with manipulated price lists for properties (high and low anchors).
These real estate agents were subsequently asked to inspect these properties and appraise their
values and purchase prices. All participants to some degree or other permitted the list prices to
influence their decisions. The list prices clearly caused them to ignore the relevant features of
the properties.
Thomas Mussweiler of the Institute of Psychology at the University of Wurzburg in conjunction
with his colleagues performed a similar experiment where they asked customers to approach
German automotive mechanics (professionals that are well-informed about the true value of
cars) with used cars that were in need of numerous repairs. After offering their own opinion of
the value of these cars, they asked the mechanics for an estimate of their value. Fifty percent of
the mechanics were given a low anchor by the customers stating, “I think that the car should sell for
about 2800.” The remaining fifty percent were provided with a high anchor by the customers
sating, “I think that the car should sell for about 5,000.” Those mechanics who were given the high-
anchor approximated the value of the cars 1000 above those given the low-anchor.
Even people who recognize that they are wise to anchors are invariably influenced by anchors.
This relates to the fact that high anchors selectively direct attention towards strong, positive
attributes, whereas low anchors selectively direct attention towards weak, negative attributes.
In the case of the estate agents, the high list price pointed their attention towards the positive
features of the properties (spaciousness, a pool, etc.), while at the same time relegating the
negative qualities (a small garden, one garage, etc.) to the back of their minds. The mechanics
who were faced with a low anchor concentrated on the wear and tear the vehicles exhibited and
did not pay heed to the positive aspects such as low mileage and the immaculate interiors.

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