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Deep Pockets and Poor Results: The Effect of Wealth Cues on First Offers in Negotiation

Author

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  • Yossi Maaravi

    (The Adelson School of Entrepreneurship, Interdisciplinary Center (IDC))

  • Boaz Hameiri

    (University of Pennsylvania)

Abstract

In this article, we examined the effect of external cues on first offers in negotiation. Specifically, we present the results of three experiments and an internal meta-analysis through which we investigated the relations between buyers’ external characteristics, which serve as cues of economic wealth, including their clothes, cars and country of origin, and sellers’ first offers in negotiation. We found that when external cues indicated wealth, counteroffers were less beneficial to those communicating the cues, resulting in higher first offers by their counterparts. We suggest, and provide empirical evidence, that these effects will emerge as long as the wealth signal is salient and perceived as an indication for the counterpart’s ‘deep pockets’, or ability to pay.

Suggested Citation

  • Yossi Maaravi & Boaz Hameiri, 2019. "Deep Pockets and Poor Results: The Effect of Wealth Cues on First Offers in Negotiation," Group Decision and Negotiation, Springer, vol. 28(1), pages 43-62, February.
    • Handle: RePEc:spr:grdene:v:28:y:2019:i:1:d:10.1007_s10726-018-9599-1
    DOI: 10.1007/s10726-018-9599-1
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    References listed on IDEAS

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    1. Pinkley, Robin L. & Neale, Margaret A. & Bennett, Rebecca J., 1994. "The Impact of Alternatives to Settlement in Dyadic Negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 57(1), pages 97-116, January.
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    3. Chapman, Gretchen B. & Johnson, Eric J., 1999. "Anchoring, Activation, and the Construction of Values, , , , , ," Organizational Behavior and Human Decision Processes, Elsevier, vol. 79(2), pages 115-153, August.
    4. Ganzach, Yoav, 2000. "Judging Risk and Return of Financial Assets," Organizational Behavior and Human Decision Processes, Elsevier, vol. 83(2), pages 353-370, November.
    5. Ritov, Ilana, 1996. "Anchoring in Simulated Competitive Market Negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(1), pages 16-25, July.
    6. Oakes, J. Michael & Rossi, Peter H., 2003. "The measurement of SES in health research: current practice and steps toward a new approach," Social Science & Medicine, Elsevier, vol. 56(4), pages 769-784, February.
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    Cited by:

    1. Wolfram E. Lipp & Remigiusz Smolinski & Peter Kesting, 2023. "Beyond the First Offer: Decoding Negotiation Openings and Their Impact on Economic and Subjective Outcomes," Group Decision and Negotiation, Springer, vol. 32(2), pages 395-433, April.

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