Abstract
The behavioral decision-making and negotiations literature usually advocates a first-mover advantage, explained the anchoring and adjustment heuristic. Thus, buyers, who according to the social norm, tend to move second, strive to make the first offer to take advantage of this effect. On the other hand, negotiation practitioners and experts often advise the opposite, i.e., moving second. These opposite recommendations regarding first offers are termed the Practitioner-Researcher paradox. In the current article, we investigate the circumstances under which buyers would make less favorable first offers than they would receive were they to move second, focusing on low power and anxiety during negotiations. Across two studies, we manipulated negotiators' best alternative to the negotiated agreement (BATNA) and measured their anxiety. Our results show that, when facing neutral-power sellers, weak buyers who feel anxious would make inferior first offers (Studies 1 and 2). When facing low-power sellers, weak buyers would make inferior first offers across all anxiety levels (Study 2). Our findings shed light on two critical factors leading to the Practitioner-Researcher paradox: power and anxiety, and offer concrete guidelines to buyers who find themselves at low power and highly anxious during negotiations.
Highlights
In most negotiations, buyers are at an inherent disadvantage due to the social norm of sellers making the first move (Maaravi et al, 2014)
Contra to our hypothesis (H1), low power buyers would have made significantly lower first offers than what the sellers demanded, which according to past research, would result in an unfavorable anchoring effect on future counteroffers and the settlement price
Anxiety was examined as a moderator of the relation between power and first offer in two different analyses: (1) low power buyer vs. neutral seller; and (2) neutral buyer vs. low power seller
Summary
Buyers are at an inherent disadvantage due to the social norm of sellers making the first move (Maaravi et al, 2014). Buyers can avoid this inherent disadvantage by making the first offer themselves, thereby establishing a more favorable anchor resulting in a better settlement price Is this advice to sellers necessarily beneficial? Recent findings point to specific situations where negotiators make disadvantageous first offers than the ones they could have received from their counterparts (Maaravi and Levy, 2017). These new studies were labeled the Practitioner-Researcher Paradox since they describe what negotiation experts—as opposed to negotiation scholars—long believe: sometimes, it is better not to make the first offer (Loschelder et al, 2016)
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