Negotiation - give a range, not a fixed number

Source: http://qz.com/356612/you-are-almost-certainly-starting-salary-negotiations-wrong/

First, a range shapes expectations about an acceptable counteroffer. When there’s a number explicitly framed as a floor, people assume you’re unlikely to take something below it. They don’t necessarily make the same assumption with a single number.

Second, there’s the politeness effect. People are much less likely to go way below the bottom number of a range because they feel like it would be insulting. Similar qualms aren’t nearly as strong with single-point offers. And offering a range is generally seen as a sign of flexibility, even when the actual numbers are relatively high.

The researchers conducted a series of five experiments. In each case, a bolstering range led to better counteroffers, higher estimates of the lowest price someone would take, and a resolution—whereas starting with a single extremely high number had the negative effect of simply shutting down more negotiations or having them end in an impasse.
They also found that a bracketing range, where you put a floor below the number you really want and a ceiling above, doesn’t work nearly as well.

An experiment pitting two people negotiating over the sale of a used car found that a bolstering range led to an average counteroffer nearly $200 dollars higher than a single-point offer, and a higher-end settlement ($6,985 versus $6,776). Bolstering ranges also outperformed bracket ranges and extremely high, single-point offers.

But the bigger payday isn’t the only benefit of offering a bolstering range. People sometimes forget that it’s not all about money, that the relationship with a superior afterwards matters as well.

Across the experiments, people offering the higher range weren’t seen as any more aggressive or obnoxious than those who offered a single point, even though the high end of their range was a much larger amount. They were also seen as more flexible and confident.

So if you’re not making the first offer in a negotiation, consider doing so (the research on how that anchors negotiations is well established), and once you do, make it a bolstering range.


Psych study abstract re. 1st offers:
J Pers Soc Psychol. 2001 Oct;81(4):657-69.
First offers as anchors: the role of perspective-taking and negotiator focus.
Galinsky AD1, Mussweiler T.

Abstract
Three experiments explored the role of first offers, perspective-taking, and negotiator self-focus in determining distributive outcomes in a negotiation. Across 3 experiments, whichever party, the buyer or seller, made the 1st offer obtained a better outcome. In addition, 1st offers were a strong predictor of final settlement prices. However, when the negotiator who did not make a 1st offer focused on information that was inconsistent with the implications of the opponent's 1st offer, the advantageous effect of making the 1st offer was eliminated: Thinking about one's opponent's alternatives to the negotiation (Experiment 1), one's opponent's reservation price (Experiment 2), or one's own target (Experiment 3) all negated the effect of 1st offers on outcomes. These effects occurred for both face-to-face negotiations and E-mail negotiations. Implications for negotiations and perspective-taking are discussed.