Publication Type
Journal Article
Version
submittedVersion
Publication Date
7-2021
Abstract
We propose that making a series of decreasing concessions (e.g., $1,500–1,210–1,180–1,170) signals that negotiators are reaching their limit and that this results in a negotiation disadvantage for offer recipients. Although we find that most negotiators do not use this strategy naturally, seven studies (N = 2,311) demonstrate that decreasing concessions causes recipients to make less ambitious counteroffers (Studies 1–5) and reach worse deals (Study 2) in distributive negotiations. We find that this disadvantage occurs because decreasing concessions shape recipients’ expectations of the subsequent offers that will be made, which results in inflated perceptions of the counterparts’ reservation price relative to the other concession strategies (Study 3). In addition, we find that this disadvantage is particularly large when concessions decrease at a moderate rate (Study 4a) and when decreasing concessions takes place over more (vs. fewer) rounds (Study 4b). Finally, we find that recipients can protect themselves against the deleterious effects of decreasing concession by thinking of a target before they enter the negotiation (Study 5).
Keywords
negotiations, concessions, reservation price, offers, signaling, distributive
Discipline
Organizational Behavior and Theory
Research Areas
Organisational Behaviour and Human Resources
Publication
Organizational Behavior and Human Decision Processes
Volume
165
First Page
153
Last Page
166
ISSN
0749-5978
Identifier
10.1016/j.obhdp.2021.05.003
Publisher
Elsevier
Embargo Period
7-19-2021
Citation
TEY, Kian Siong; SCHAERER, Michael; MADAN, Nikhil; and SWAAB, Roderick I..
The impact of concession patterns on negotiations: When and why decreasing concessions lead to a distributive disadvantage. (2021). Organizational Behavior and Human Decision Processes. 165, 153-166.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/6735
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.obhdp.2021.05.003