The effects of anchor points and reference points on negotiation process and outcome

One aim of the study was to investigate the hypothesis that in negotiations a first counteroffer is jointly influenced by an anchor point and a reference point, A second aim was to extend this hypothesis to subsequent offers and counteroffers, Specifically, it was hypothesized that when buyers in a price negotiation perceive an anchor point (seller's initial offer) as a gain instead of a loss, the number of offers will decrease and the selling price increase, Seventy-two undergraduates playing the role of buyers or sellers were asked to negotiate the price of condominiums, Anchor points and reference points were manipulated by presenting the buyers with three different initial offers and by setting the buyer's reservation price higher or lower than the initial offer, respectively, In line with the hypothesis, a joint influence on buyers' first counteroffers was observed of the anchor points and reference points, It was further shown that when buyers perceived the initial offer as a gain instead of a loss, they bought at a higher price, the number of offers decreased, and fewer impasses were observed. (C) 1997 Academic Press.