The First-Mover Disadvantage

Abstract

The current research establishes a first-mover disadvantage in negotiation. We propose that making the first offer in a negotiation will backfire when the sender reveals private information that an astute recipient can leverage to his or her advantage. In two experiments, we manipulated whether the first offer was purely distributive or revealed that the sender’s preferences were compatible with the recipient’s preferences (i.e., the negotiators wanted the same outcome on an issue). When first offers contained only distributive issues, the classic first-mover advantage occurred, and first offers predicted final prices. However, a first-mover disadvantage emerged when senders opened with offers that revealed compatible preferences. These effects were moderated by negotiators’ social value orientation: Proself negotiators were more likely to take advantage of compatible information than were prosocial negotiators. Overall, the key factor that determined whether the first-mover advantage or disadvantage emerged was whether the offer revealed compatible preferences. These results demonstrate that first offers not only provide numerical value but also convey qualitative information.