Understanding the first-offer conundrum: How buyer offers impact sale price and impasse risk in 26 million eBay negotiations.

ABSTRACT: How low is the ideal first offer? Prior to any negotiation, decision-makers must balance a crucial tradeoff between two opposing effects. While lower first offers benefit buyers by anchoring the price in their favor, an overly ambitious offer increases the impasse risk, thus potentially precluding an agreement altogether. Past research with simulated laboratory or classroom exercises has demonstrated either a first offer's anchoring benefits or its impasse risk detriments, while largely ignoring the other effect. In short, there is no empirical answer to the conundrum of how low an ideal first offer should be. Our results from over 26 million incentivized real-world negotiations on eBay document (a) a linear anchoring effect of buyer offers on sales price, (b) a nonlinear, quartic e

SUBMITTER: Schweinsberg M 

PROVIDER: S-EPMC10410759 | biostudies-literature | 2023 Aug

REPOSITORIES: biostudies-literature