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

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.

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Acknowledgements

Yossi Maaravi is grateful to Leumi for supporting this research through the “Leumi Innovation Project” grant. Boaz Hameiri is grateful to the Azrieli Foundation for the award of an Azrieli Fellowship.

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Correspondence to Yossi Maaravi.

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Maaravi, Y., Hameiri, B. Deep Pockets and Poor Results: The Effect of Wealth Cues on First Offers in Negotiation. Group Decis Negot 28, 43–62 (2019). https://doi.org/10.1007/s10726-018-9599-1

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Keywords

  • First offers
  • Anchoring
  • Negotiation
  • Ability to pay
  • Deep pockets