Anchoring in Simulated Competitive Market Negotiation

example, framing of outcomes in positive or negative The competitive market simulation (Bazerman, Magterms has been shown to affect negotiators perforliozzi, & Neale, 1985) was used to explore anchoring mance and total profit (Bazerman, Magliozzi, & Neale, effects in negotiation. Two possible anchoring effects 1985; Neale & Northcraft, 1986). Other biases, such as were examined in the present study. One effect inundue reliance on readily available information, and volved the profit schedule format; although individual overconfidence in judgment have also been shown to profit schedules for buyers and sellers were normaaffect negotiators (Neale, 1984; Neale & Bazerman, tively equivalent, in most previous studies the buyer’s 1985). schedule was presented in decreasing order, whereas One of the cognitive heuristics which extensively afthe seller’s schedule was increasing. Anchoring on the first number in the profit list would contribute to the fects individual decision making (Tversky & Kahnebuyer’s advantage, often found in this research. The man, 1974; Kahneman, 1992) is termed Anchoring. effect of schedule format was tested here by running This heuristic is employed in various cases in which a separate simulation with inverted formats. As preone needs to estimate an unknown value. To generate dicted, the relative advantage of buyers over sellers the required estimate, one begins by anchoring on a reversed with the change in profit schedule format. salient available point and continues by making adjustThe second anchoring effect involved the initial offers. ment away from that anchor. The adjustment is typiIn running the simulated market, initial offers were cally insufficient, thus yielding a final estimate which recorded as well the initiator’s assigned role. Initial is overly affected by the anchor. Anchoring number esoffer values, for both the initiator and the non-initiator timates on irrelevant information has been shown to significantly affected final profit. The impact of schedule format on final agreement appeared mostly due to affect experienced negotiators as well as novices its effect on initial offers. Finally, the role of experi(Northcraft & Neale, 1987). ence was examined. As in Bazerman et al. (1985), joint A novel methodology, first developed by Kelley (1966) profit increased with learning. The increase stemmed and later extensively used by Bazerman and his associfrom improved value of the initial offer from the perates (Bazerman, Magliozzi, & Neale, 1985; Neale & spective of the non-initiator. The results provided no Bazerman, 1991) enabled researchers to study the imindication of a decline in format schedule effect or in pact of judgmental biases on integrative bargaining in the major impact of initial offers, as negotiators gain laboratory setting. In the setting employed by Bazerexperience. The implications of results concerning the man et al. (1985) subjects, randomly assigned roles as role of anchoring in negotiation are discussed. q 1996