Organizational Behavior and Human Decision Processes Anchoring in Simulated Competitive Market Negotiation

Abstract The competitive market simulation (Bazerman, Magliozzi, & Neale, 1985) was used to explore anchoring effects in negotiation. Two possible anchoring effects were examined in the present study. One effect involved the profit schedule format; although individual profit schedules for buyers and sellers were normatively equivalent, in most previous studies the buyer's schedule was presented in decreasing order, whereas the seller's schedule was increasing. Anchoring on the first number in the profit list would contribute to the buyer's advantage, often found in this research. The effect of schedule format was tested here by running a separate simulation with inverted formats. As predicted, the relative advantage of buyers over sellers reversed with the change in profit schedule format. The second anchoring effect involved the initial offers. In running the simulated market, initial offers were recorded as well the initiator's assigned role. Initial offer values, for both the initiator and the non-initiator significantly affected final profit. The impact of schedule format on final agreement appeared mostly due to its effect on initial offers. Finally, the role of experience was examined. As in Bazerman et al. (1985), joint profit increased with learning. The increase stemmed from improved value of the initial offer from the perspective of the non-initiator. The results provided no indication of a decline in format schedule effect or in the major impact of initial offers, as negotiators gain experience. The implications of results concerning the role of anchoring in negotiation are discussed.