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There is a wide consensus that first offers have a significant impact on negotiation outcomes by causing an anchoring effect. Many aspects of first offers have been analyzed, including factors that lead to making the first offer and characteristics that strengthen the impact of first offers. However, a holistic view of the process of first offers in negotiations remains missing, and significant research gaps must be filled to fully understand the mechanisms of first offers. Furthermore, while extant research contains anecdotal advice for negotiators, no holistic overview of research findings has been presented to date. This study conducted a structured review of 119 journal articles published since 1967, contributing to the field in four main ways: (a) proposing a definition of first offers, (b) integrating previous findings into a process model of first offers in negotiation, (c) summarizing the results to date in a structured literature review, and (d) identifying crucial research gaps that must be addressed. Future research should conduct systematic investigations of the influence of first offers on negotiation outcomes, employing a “negotiation lens” to emphasize the dyadic and interactive character of negotiations.
Beyond the first offer
(2023)
First offers play a significant role in negotiations as they anchor negotiators’ perceptions and influence negotiation outcomes in favor of the first-offer proposer. However, negotiation is a joint decision-making process in which a first offer is typically succeeded by a counteroffer. The impact of a counteroffer has not yet been systematically researched. We propose that a counteroffer influences negotiation outcomes like a first offer. In addition, we conceptualize the “anchor zone” as the distance between the first offer and the counteroffer. We theorize that the anchor zone influences negotiation outcomes because it captures additional information compared to a single offer. To test our hypotheses, we conducted two studies: Study 1 was a vignette study (n = 190) in which participants reacted to a counteroffer that they received based on their first offer as part of a simulated negotiation. Study 2 was an online experiment (n = 212) in which participants negotiated by exchanging offers with no further communication. Our analysis suggests that the counteroffer is a significant predictor of economic outcomes. Thus, it works like a first offer, but with a lower impact. In addition, the anchor zone predicted how far the final agreement was from the first offer. Furthermore, we found that the third offer, the average concessions, and the number of offers mediated the effects of the counteroffer and anchor zone on economic outcomes. Finally, we discovered that a more aggressive counteroffer reduced the subjective value of both negotiators.