Determinants of bargaining behavior in a bilateral monopoly situation: Opponent's concession rate and relative defensibility

Abstract

The effects of a seller's concession rate strategy, the relative defensibility of his initial offer, and the size of his initial concession on various behavioral and perceptual aspects of buyers' bargaining were investigated in a bilateral monopoly situation. These variables are suggested from developments in experimental social psychology and formal economic models of bargaining. The buyers were boys at a summer camp; the sellers were simulated according to a prearranged program. The strongest effects were produced by the concession rate manipulation, including an inverse relationship between seller and buyer “softness”, i.e., as sellers became increasingly “soft,” through the course of bargaining, buyers became increasingly “tough”. Conversely, in response to an unchanging seller concession rate through the session, buyers' concessions also remained unchanging. Relative defensibility produced significant effects on the buyer's initial goals, his anticipations of the seller's concessions, and on his early trial concessions. The size of the seller's initial concession produced no significant effects. The results were discussed partially in terms of their implications for the effects of alternative concession rate strategies on the pattern of concessions elicited from an opponent.