Why do some negotiators benefit from making the first offer during negotiations while others do not? This study explores the contents of conversations that take place before negotiators make their first offers in order to learn more about the differences between ultimately successful first offers that benefit from anchoring effects and ultimately unsuccessful ones in which negotiators apparently derive no benefit from making the first offer.

In‐depth qualitative analyses of the conversations that role players engaged in prior to their first offers were conducted in simulated negotiation exercises. Their analysis identified five different conversational tactics that negotiators employed in one‐on‐one negotiations to gain power in the negotiation, or what they call here “power conversation tactics.” Their findings suggest that the negotiation outcome (i.e., net value) was related to how the negotiators employed and combined these tactics during the pre‐offer conversation.

Based on these findings, they conceptualized four types of power‐gaining/power‐losing pre‐offer conversation scenarios and explored the link between negotiation outcomes and each of these types of pre‐offer conversations. This study further develops the literature on power dynamics and conversations in negotiations as well as the literature on the anchoring effect of a first offer.

The question of who should make the first offer in a distributive bargaining scenario has long vexed negotiation theorists. Despite strong support in the literature for a “first‐mover advantage” (Northcraft and Neale 1987; Ritov 1996; Gunia et al. 2013), negotiators are often cautious about making the first offer because of the reported incidence of first‐mover dissatisfaction (Ku, Galinsky, and Murnighan 2006; Loschelder et al. 2014).

Overall, the negotiation research literature supports the existence of an “anchoring effect”—that is, whoever makes the first offer (a buyer or a seller) gets more in the end—but scholars have also tried to explain why this anchoring effect does not always work. Adam Galinsky and Thomas Mussweiler (2001) found that if an opponent actively focuses on challenging the negotiator's first offer by tackling the rationale behind that first offer, the first‐mover advantage weakens. Recently, David Loschelder and his colleagues (2014) found that when the first offer reveals information of which the counterpart is unaware, the person making the first offer derives less benefit from the anchoring effect of making the first offer.

In the literature, discussions about the different conditions that undermine the anchoring effect of first offers have been closely connected to the notion of power. Joe Magee, Adam Galinsky, and Deborah Gruenfeld (2007) found that the relatively more powerful negotiator was more likely to make the first offer. Marc Buelens and Dirk Van Poucke (2004) found that negotiators compare their power to their counterparts and consider this when deciding whether to make a first offer. In summary, the perceived power structure in a dyad affects the first offer.

In this study, we hypothesized that the power dynamic that develops during the initial stage of the negotiation is the underlying mechanism that can determine whether the first mover has an advantage or not. Specifically, we explore here the power dynamics that emerge during negotiation processes before the first offer is made (i.e., the initial phase of negotiation) and how they relate to negotiation outcomes. Although abundant research has viewed power as “the objective control of resources” (Greer and Bendersky 2013: 242), some scholars have argued that power and status can be matters of subjective perception, that is, that power is “in the eye of the beholder,” and that power can be negotiated through behavior. For example, “expectation states theory” (Correll and Ridgeway 2003; Ridgeway and Correll 2006) seeks to explain how individuals assess the status of other individuals based on how they expect that individual to contribute to the group. According to this theory, such non‐negotiable characteristics as gender and race will influence expectations of the individual's contribution to the group (Ridgeway, Berger, and Smith 1985; Ridgeway 2009), but individuals can employ “power moves,” that is, assertive or dominant behaviors, to increase their perceived competence and, hence, their perceived power (Tiedens and Fragale 2003; Anderson and Kilduff 2009b; Bendersky and Shah 2012). Therefore, because a perceived power structure influences the first offer (Buelens and Van Poucke 2004), we believe that the power dynamics that develop prior to the first offer are worth examining.

In this study, we have analyzed conversations to capture negotiation power dynamics. Individuals create meaning and build relationships through conversations (Glenn and Susskind 2010), and the conversation between two negotiating parties can change their pre‐existing relationships and power dynamics (Wheeler 2013). Thus, we believe that taking a close look at the contents of conversation in a one‐on‐one negotiation can deepen our understanding of the power dynamics.

The research questions that guided this study are as follows:

  1. What types of “power” conversations or conversation tactics would analyses of pre‐offer conversations reveal?

  2. What types of conversations lead to successful first offers? In other words, how are these different types of conversations related to final negotiation outcomes?

Although the existing literature sheds light on each of the key constructs in this study including first offers, negotiation outcomes, and negotiation conversation content, researchers are still unsure about the relationships of these elements to each other. Furthermore, conversations that occur prior to the first offer and their effects on negotiation outcomes have rarely been studied. An inductive, qualitative research design is particularly appropriate when a researcher seeks to fill gaps within and across existing and/or underdeveloped constructs and relationships (Lee, Mitchell, and Sablynski 1999). Hence, because explicit discussion of the possible relationships among conversation content, first offers, and negotiation outcomes occurs rarely, developing hypotheses from the existing literature proved exceedingly difficult, so we chose to employ an inductive qualitative approach to answer these research questions by analyzing the pre‐offer conversations of twenty‐two pairs of students engaged in a simulated negotiation exercise.

Numerous scholars have empirically shown the importance of power relationships in negotiations (Tedeschi, Schlenker, and Bonoma 1973; Bacharach and Lawler 1981; Kim, Pinkley, and Fragale 2005; Greer and Bendersky 2013). Abundant research has confirmed that the more power that negotiators have relative to their counterparts, the more likely they are to claim greater value from the negotiation than their counterparts (e.g., Thompson 2000). These studies examined how existing power differences between parties affect negotiation outcomes.

Some negotiation scholars have argued, however, that status is subjective and perceptions of power are affected by bounded rationality and imperfect information, so they can be manipulated via individual behavior or “power change tactics” (Kim et al. 2005). The power structure of a negotiation is, therefore, not fixed and the individuals involved can change it. Specifically, the literature indicates that individuals will typically use two strategies to attain high social status within a group, either competition‐oriented or cooperation‐oriented (Greer and Bendersky 2013). Individuals may, for example, behave dominantly (Anderson and Kilduff 2009a, 2009b) by speaking in assertive tones (Aries, Gold, and Weigel 1983), making direct eye contact (Snyder and Sutker 1977), and talking more than their counterparts (Curhan and Pentland 2007) to gain high status in a group. In contrast, individuals may engage in generous behaviors or share know‐how to earn respect from others in the group and, hence, attain high social status through cooperative behaviors (Hardy and Van Vugt 2006; Willer 2009; Bendersky and Shah 2012). They will succeed in improving their status if these generous behaviors benefit the group but lose status if they do not (Bendersky and Shah 2012).

Furthermore, according to the literature on “thin slices” (Ambady and Rosenthal 1992), individuals develop attitudes about others based on quick first impressions (e.g., in as little as ten seconds), and these attitudes can be sustained for a long time. For example, Nalini Ambady and Robert Rosenthal (1993) found how students assessed a teacher's effectiveness using a thirty‐second video that predicted their evaluation of the teacher at the end of a semester. More recently, Jared Curhan and Alex Pentland (2007) found that the conversations in the first five minutes of negotiations predicted 30 percent of the variance in the outcomes.

Negotiation studies have also found that a focus in the initial phase of negotiation is on relationship building (Holmes 1992) and that the initial phase entails several role‐oriented verbal behaviors (Thompson and Hastie 1990) that could affect the power dynamics in negotiations. These studies suggest that, once one party makes the first offer, the problem‐solving phase of intense debates on offers and counteroffers starts, and the first offer represents an event that marks the end of the initial phase and the beginning of the problem‐solving phase. Hence, by analyzing the interactions between the two parties during the pre‐offer conversation, we can learn more about the strategies that individuals employ to gain power in the negotiation and the impact of those strategies on the first‐offer advantage and the negotiation outcome itself.

To explore the relationship between pre‐offer conversation and negotiation outcomes, we gathered conversation data and negotiation results data through a simulated negotiation exercise and employed an inductive qualitative method to analyze these data.

Participants

Forty‐four undergraduate students at a major South Korean business school participated in the study; thirteen of the participants were women.1 All participants were enrolled in a course on negotiation and participated in this experiment in the third session of the class. Participants had already been exposed to such key negotiation constructs as best alternative to a negotiated agreement (BATNA) and zone of possible agreement (ZOPA) in the first two sessions. Research suggests that students with some negotiation training are not outperformed by professional negotiators (Herbst and Schwarz 2011). Our participants had not yet studied negotiation power strategies and the relationship between making the first offer and a favorable negotiation outcome, which therefore made it possible to test the effects of anchoring (first offer) and the use of power strategies in the negotiation. We asked the students about their past and present work experiences and verified that none of these students had engaged in negotiation professionally as a regular aspect of his or her job duties. We deliberately chose those with limited real negotiation experiences because research has shown that novices have a different conceptualization of negotiation than experienced negotiators (Neale and Bazerman 1991). For example, novices are more likely to approach negotiation with distributive bargaining in mind (O'Connor and Adams 1999), while experienced negotiators are more likely to believe that integrative bargaining approaches can lead to better outcomes (Neale and Bazerman 1991). Hence, we tried to select participants with similar levels of negotiation experience across our sample.

Study Design

Negotiation Exercise

We randomly assigned participants to the buyer or seller role in the Cartoon exercise, which is based on the Working Women exercise (Tenbrunsel and Bazerman 1995) and has been used in negotiation studies across various cultures (Brett and Okumura 1998; Adair, Okumura, and Brett 2001). In the exercise, a buyer representing a television station and a seller representing a production company negotiate the syndication of the Ultra Rangers television show. Four issues are at stake in the negotiation: price per episode, the number of times each episode may be aired, the financing arrangement, and the inclusion of a second show, Strums. Price is a distributive issue, so one party's gain requires the other party's loss. The number of runs and the financing arrangement, however, have integrative potential because each party has a different preference: the buyer gains from a contract that allows the show to run more frequently whereas the seller gains more from an upfront financing arrangement. The issue of the additional show contains both integrative and distributive elements because both parties could benefit from its inclusion in the contract, but determining its price is a distributive issue.

Data

We collected both quantitative and qualitative data in this study. To distinguish successful from unsuccessful first offers, we used quantitative data to measure the negotiation outcome. We used qualitative data to analyze the contents of the conversations that occurred between participants prior to the first offer.

Qualitative Data

Because we sought to better understand the role of pre‐offer conversations on negotiation outcomes, we analyzed the participants’ conversations. After reading the Cartoon exercise instructions, twenty‐two dyads negotiated for, on average, three‐quarters of an hour. We recorded the entire negotiation conversation of each pair participating in the Cartoon exercise and transcribed the conversation verbatim up to and including the first offer in the participants’ native language, Korean.2

We also took extra steps to gain a broader picture of the entire negotiation all the way to the final negotiated price. Both authors listened to the entire negotiation conversation and asked our research assistant to report the entire negotiation content in detail, but not verbatim. For example, when the negotiator said “For us, the issue is rerun, we think that five years, the five years of rerun is problematic. It's, it's just too much exposure” after the first offer, the research assistant wrote, “We think rerun is an issue because the Ultra Rangers is too exposed through multiple reruns.” In this way, he was able to provide all the details of the conversation that occurred following the first offer line by line without transcribing it verbatim.

Quantitative Data

We evaluated negotiation outcome based on the net value of the deal to each negotiator. During the negotiation exercise, the buyers and sellers each received different worksheets explaining the valuation of each issue in the negotiation. Following the negotiation, each participant completed a contract sheet that recorded the agreement on four issues: price per episode, number of times each episode would be allowed to run, the financing arrangement, and whether Strums was or was not included as part of the deal. Each party reported the net value of the deal, which we operationalized as the gross value of the deal minus the value of his or her BATNA, on separate worksheets. We then reviewed the detailed information on every worksheet and compared the worksheets to the negotiation transcripts to double check and verify the accuracy of participants’ calculations.

Data Analysis

We analyzed the transcriptions of the entire pre‐offer conversation for each of the twenty‐two pairs according to the inductive grounded theory approach (Eisenhardt 1989; Glaser and Strauss 1966 [2005]); in other words, we began with open‐ended questions about the content of the negotiation conversations and built theoretical propositions by identifying themes that emerged in the conversations. We also analyzed the quantitative net value data to determine negotiation outcomes.

We analyzed the data iteratively, developing theoretical conclusions from the data and then reexamining the data in light of those constructs (Corbin and Strauss 1990; Miles and Huberman 1994; Locke 2001). As dominant themes emerged, we organized them into theoretical frameworks. After evaluating the utility of each of these, we chose the one that we believed would make the strongest contribution to the negotiation literature. Figure One illustrates how we coded the data, identified themes, and used the data to develop and then support our theories.

Figure One

Date Collection and Analysis

Note. Color figure can be viewed at wileyonlinelibrary.com.

Figure One

Date Collection and Analysis

Note. Color figure can be viewed at wileyonlinelibrary.com.

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Identifying Units and Creating First‐Order Codes

After collecting both qualitative (summarized texts) and quantitative (net values) data, we first analyzed the text data to learn about the contents of the pre‐offer conversation. First, the first author read the transcripts line by line while listening to the digital recording to understand the texts in context. She could, for example, hear pauses, interruptions, and overlapping speech. She also annotated the transcript summaries based on what she heard on the recordings.

Next, the first author read through these annotated texts to define various conversational categories based on their function and to create first order codes through a process of open coding (i.e., breaking down the elements of the conversation according to underlying functions and purposes; Locke 2001). In most cases, a single utterance served a single function, but we identified a few exceptions. For example, a student in the seller role said, “I am not an animation expert, but a sales expert. Umm … Ultra Rangers is very popular amongst Japanese adolescents for sure. It is truly a hit and a star program developed by our team. The viewer rating is reaching 30 percent.”3 We coded this statement as both “bragging” and “voluntarily sharing information” because the speaker first proclaimed the program's popularity and next intentionally or unintentionally revealed non‐public information that did not appear in the buyer's information sheet for the exercise.

The first‐order codes were created to designate the function of each utterance in the negotiation conversation. The first author invited the second author to code the data using the codes that she had created without telling him how she had coded the text data. The second author then separately coded the data using those codes. This process required multiple rounds of collaboration and revision in order to assign first‐order codes to each utterance that were acceptable to both authors for all twenty‐two conversations.

Quantitative Data

Because the purpose of this study is to better understand why some negotiators benefit from the anchoring effect of making the first offer while others do not, we examined the quantitative data for each negotiation, including the net value of the agreement for the buyer, for the seller, and for both parties jointly. If a negotiator made the first offer and achieved a higher net value from the negotiation than did her counterpart, we concluded that she benefitted from the anchoring effects and characterized this as a “successful” offer. If a negotiator's initial offer did not lead to higher net value than his counterpart's, however, we categorized this as an “unsuccessful” first offer. (We acknowledge that net value was not the only criteria for success and the negotiator who received comparatively less value from the deal than his or her counterpart may have nonetheless been satisfied with the outcome.)

To compare the successful and unsuccessful first offers, we printed out all the pre‐offer conversation texts and their codes, and divided them into two groups. In twelve cases, the negotiator who made the first offer was more successful and in ten cases was not. At this stage of the analysis, we employed axial coding, that is, coding across concepts and categories to reveal more thematic relationships and contrasts, because this type of coding allows a researcher to explore the coding similarities within a group (here, for example, the successful first‐offer group) and the differences in coding structure and relationships between two or more groups (here, the successful first‐offer group vs. the unsuccessful first‐offer group) (Strauss and Corbin 1998; Locke 2001). We read through each pile to identify conversational similarities within each group and differences between the two groups. By engaging in multiple rounds of axial coding, we were able to identify five theoretical categories.

Because we were interested in “the content of the dialogue said rather than the interactive nature of the negotiation” (Weingart, Olekalns, and Smith 2005), the unit of analysis for these theoretical categories was an utterance with a clearly identifiable communication purpose (i.e., we did not include meaningless utterances such as “unh” or “ah”). We kept our minds open to any theoretically meaningful categories (i.e., conceptual categories that can replicate or extend theories on negotiation and bring meaningful theoretical insights to the literature) and considered our broad review of the literature on negotiation conversations as we conducted our data analysis.

Aggregating Categories and Generating Themes

Through our axial coding we identified five types of conversational tactics. These were information seeking, patronizing, organizing, proposing, and sharing.

Generating a Typology of Power

We next analyzed which first offers worked and which did not work to see if negotiators who made successful first offers used power conversation tactics differently than those negotiators whose first offers were unsuccessful and also to see how the other party responded to various power conversation tactics used by negotiators making the first offer. Through this process we developed a typology of power‐gaining/power‐losing pre‐offer conversations (see Table One).

Table One

Power Conversation Tactics

TacticAction (First‐Order Codes)Examples
Information seeking Asking for information So … um … what is the price per episode that WCHI is thinking right now? 
Patronizing Disparaging product This is getting a lot of negative reviews due to its obscenity and violence … don't you think the developer has a certain responsibility for this negative reaction? 
Bragging You are aware how popular our program is, huh? We have a very wide range of audience. 
Organizing Stating what needs to be done in negotiation What we have to discuss is … the price per episode, number of reruns, financial conditions including the years of payment, other issues … these four … right? Is there something else that you would like to discuss? 
Proposing Suggesting a focus/setting up a boundary We have budget constraints. We need to keep the number of reruns to a certain level. Later, you may have another contract with us but the success of Ultra Rangers will help with the following contracts. Therefore, the more reruns we have, the more successful Ultra Rangers will be. Also, regarding the financial terms for payment, can we pay from Year 1 and reduce the amount continuously? 
Sharing Voluntarily sharing information It is very important for us to make this deal. We are trying to have financial stability through this deal. So, you told us that more reruns benefit you? The more runs … meaning eight times … if it is nine times, the benefit will be the same as when you have eight times. We cannot give you nine times … it is still loss for us if we give you eight times of reruns … it is a loss … but … this is less of a loss than receiving the money later. 
TacticAction (First‐Order Codes)Examples
Information seeking Asking for information So … um … what is the price per episode that WCHI is thinking right now? 
Patronizing Disparaging product This is getting a lot of negative reviews due to its obscenity and violence … don't you think the developer has a certain responsibility for this negative reaction? 
Bragging You are aware how popular our program is, huh? We have a very wide range of audience. 
Organizing Stating what needs to be done in negotiation What we have to discuss is … the price per episode, number of reruns, financial conditions including the years of payment, other issues … these four … right? Is there something else that you would like to discuss? 
Proposing Suggesting a focus/setting up a boundary We have budget constraints. We need to keep the number of reruns to a certain level. Later, you may have another contract with us but the success of Ultra Rangers will help with the following contracts. Therefore, the more reruns we have, the more successful Ultra Rangers will be. Also, regarding the financial terms for payment, can we pay from Year 1 and reduce the amount continuously? 
Sharing Voluntarily sharing information It is very important for us to make this deal. We are trying to have financial stability through this deal. So, you told us that more reruns benefit you? The more runs … meaning eight times … if it is nine times, the benefit will be the same as when you have eight times. We cannot give you nine times … it is still loss for us if we give you eight times of reruns … it is a loss … but … this is less of a loss than receiving the money later. 

Power Conversation Tactics

Based on our analysis of the negotiation conversations, we identified five categories of power conversation behaviors that parties used to gain power in the negotiation: information seeking, patronizing, organizing, proposing, and sharing. These are summarized in Table One.

When a negotiator asked the other party for information that was not already revealed in the simulation instructions, we coded that as information seeking. An example would be a conversation in which a seller asked a buyer for his or her preferred price. We also noted those times when a negotiator asked a question but failed to obtain the information and recorded these as information‐seeking failures to distinguish successful information seeking from unsuccessful ones. Below is an example of information seeking that worked and then one that did not. (S stands for seller and B stands for buyer.)

(Information seeking from Pair #07)

B: Yes … We think that we can get as much income as we get from other programs with Ultra Rangers. However, how much are you thinking of? We are curious … we of course would like the price to be lower but in the long run, when we think of the long‐term relationship, we cannot go as low as we want to. So … how much are you thinking of?

S: We … right now, we expect … when we think of how this was on national TV and had a pretty good market share … and also this program has a great rating in Japan … so we think about eight million.

(Information‐seeking failure from Pair #07)

S: Um … Yeah. Ah … we have been thinking … and we think SCHI is our best bet … and also, we will start in Chicago for now but there is a chance that we are airing nationwide … So, we are negotiating with this approach. How much are you thinking? If you are signing the contract?

B: What is the price you have in mind?

We coded conversations in which a negotiator sought to disparage the other party's product or company or boasted about his or her company/product as patronizing. In some cases, the expression was polite and formal but the contents of the comment were sarcastic and/or condescending. For example, a buyer raised the issue of the impact of violence of such TV programs as Ultra Rangers on youngsters. He suggested that such shows could have unhealthy impacts on children and adolescents.

In the following examples, both the buyer and seller made utterances that we coded as patronizing:

(Pair #22)

S: Well … WXYZ is a small firm, isn't it? So they do not have the ability to manage such a hit and WILL [ed. Note: WILL is the name of the firm] … they are reviewing … but the concept that they have is different from ours and, therefore, it depends on how much they give in. Doesn't exactly mean that we close our doors to WILL … we are trying to find the right firm to air our program. We heard that your company had been number one for a while and was recently in the midst of restructuring … lost your position to other companies … we read that in the magazine … no, it was in the news.

B: Our company is the largest … and Multimed … Multimed is our parent firm so we do not really care about the recent minor issue. So why don't we try to make a good deal with Gazi?

We coded statements designed to facilitate the negotiation process itself as organizing. For example, at the beginning of the negotiation, a seller verified the four negotiation issues. Such statements helped to frame the discussion but occurred less frequently.

We applied our fourth category, proposing, to utterances in which negotiators suggested a focus or approach for reaching agreement. When a negotiator proposed an approach to resolving the issue, we coded that utterance as proposing. In multiple cases, this proposing involved or precipitated sharing because, while making a proposal, negotiators (sometimes seemingly unintentionally) shared information that was not previously available to their counterparts. For example, a seller stated that he found the financing arrangement to be a more difficult issue than the number of reruns, effectively communicating his priorities by proposing which items to discuss first. Thus, we also coded such an utterance as sharing. In these cases, the other party did not actively seek information but such information was nonetheless revealed.

As noted earlier, previous research has shown that both cooperative and competitive behaviors can help individuals gain higher status within a group (Greer and Bendersky 2013) as can dominance behavior (e.g., making direct eye contact, speaking in an assertive tone) (Snyder and Sutker 1977; Aries, Gold, and Weigel 1983; Anderson and Kilduff 2009b). These previous studies focused on group situations, however, whereas this study explores the impact of these behaviors on dyadic negotiation. The patronizing behavior we identified can be categorized as competition‐oriented behaviors, as the transcript excerpts in Table One show, and the information‐seeking behavior sometimes can as well.

In negotiation situations, sharing information often suggests a cooperative intent, and sharing new information that the negotiator's counterpart may not already have access to can be perceived as self‐sacrifice, and self‐sacrifice can generate respect (Hardy and Van Vugt 2006; Willer 2009). In a negotiation, such self‐sacrifice can confer status.

The remaining two types of utterances that we identified are organizing and proposing. These statements facilitated the negotiation process without explicitly seeking additional information by helping negotiators prioritize issues, although in some cases they catalyzed information‐sharing utterances.

Our findings show how negotiators used a variety of competitive and cooperative strategies to gain power in their negotiations.

Power‐Gaining and Power‐Losing Pre‐Offer Utterances

Because we were most interested in the factors that distinguish successful and unsuccessful first offers, we examined the similarities and differences among the twelve first‐offer pairs that were successful and the ten that were unsuccessful by analyzing the sequence, combination, and frequency of power conversation tactics the negotiation role‐play participants used. We developed a classification system, or typology, to explain which conversational tactics seemed to have the most impact on first‐offer success.

Specifically, we identified four types of conversational power dynamics that seemed to affect whether or not the negotiator making the first offer was relatively more successful in the negotiation than his or her counterpart. They are as follows:

  • gaining power through information seeking,

  • losing power through failed information seeking,

  • losing power through patronizing, and

  • losing power through sharing and/or proposing.

We define power here as overcoming or failing to overcome the first‐offer advantage. According to this definition, we found that information seeking was both a power‐gaining and power‐losing tactic, while patronizing, and sharing/proposing seemed to be associated more with power loss than power gain. “Gaining power through information seeking” correlated with overcoming the counterpart's first‐offer advantage. In these cases, a buyer or a seller asked the other party for information about what price the other party expected to pay or receive for the television show, the other party answered by making a first offer, and the negotiator asking the question gained a higher net value from the deal than did his or her counterpart.

In the other three scenarios that we identified, the anchoring advantage held and the negotiator who made the first offer ultimately ended up with higher net value. Specifically, the first‐offer advantage was maintained in the second scenario because the negotiator who made the first offer did not provide the information that the other party sought to obtain during pre‐offer conversations. In six of these cases, both seller and buyer used roughly the same number of similar power conversation tactics, but the negotiator who succeeded in not providing information to the other negotiator benefitted from the first‐offer advantage.

In the third scenario, “losing power through patronizing,” condescending behavior seemed to confer no advantage. This occurred in three cases. When both parties mixed multiple power conversation tactics during the pre‐offer conversation, the person who used the patronizing tactic more frequently let the other party make the first offer and ended up with a lower net value than the counterpart's.

Our fourth scenario is “losing power through sharing/proposing.” In three cases both parties employed multiple power conversation tactics in the pre‐offer conversation and the negotiator who voluntarily shared information ended up with lower net value than the other party who grounded the first offer on the information shared by the negotiator. The negotiator may have attempted to frame the negotiation by proposing a specific approach to an issue at hand but ended up (knowingly or unknowingly) sharing non‐public information, which seems to have advantaged the other party.

In summary, our analysis of negotiation conversations suggests possible explanations for why negotiators sometimes fail to benefit from the first‐mover advantage. How negotiators and their partners employ power conversation tactics before the first offer seems to have some impact on the outcome of the negotiation.

Theoretical Implications

This study enriches and complicates our understanding of first offers and anchoring effects. Our development of a typology of power‐gaining/power‐losing pre‐offer conversational tactics suggests factors that may solidify or weaken the first‐mover advantage. Whereas most previous studies have confirmed the anchoring effect (e.g., Northcraft and Neale 1987), others suggested conditions in which the effects were mitigated (Galinsky and Mussweiler 2001; Loschelder et al. 2014). For example, a study by Galinsky and Mussweiler (2001) showed how responses by negotiation opponents can reduce the anchoring effect of first offers. Loschelder and his colleagues (2014) found that the first mover advantage can diminish when the first mover shares non‐public information with the opponent when making the first offer. These studies focused on first offers and responses to them, but this study explored conversation between the parties occurring prior to the first offer.

We found that in ten out of twenty‐two simulated negotiations the first mover did not gain more value from the deal than his or her counterpart, which suggests that in those cases he or she did not have an advantage over his or her counterpart and the first offer had no anchoring effect. We also found that, in these cases, the more successful negotiator had engaged in a process of information seeking and questioning. Similar to what Loschelder and his colleagues (2014) reported, it seems that the negotiator making the first offer revealed additional information that was previously unknown to his or her counterpart, giving up some of his or her first‐offer advantage in the process.

The first‐mover advantage held for the other twelve negotiations in our study. Previous studies reported that the first mover often achieves a better outcome because apparently the first offer acts as an anchor in the negotiation (Northcraft and Neale 1987; Gunia et al. 2013). But strong resistance to the first offer can override this anchoring effect (Galinsky and Mussweiler 2001). While these studies focused on the behavior of the other party after the first offer, our findings suggest that conversation prior to the first offer may have some impact on whether a first offer actually serves as an anchor. When the negotiator and his or her counterpart employed similar power conversation tactics with similar frequency prior to the initial offer, negotiators (a) whose questions uncovered no new information; (b) who employed aggressive, patronizing, or condescending tactics; or (c) who revealed non‐public information in the course of making suggestions and proposing approaches were not able to overcome the first‐mover advantage.

In this study, we also identified several specific “power conversation tactics” that negotiators use. Power has been examined in multiple negotiation settings and several studies have also examined negotiation transcripts to see how negotiation conversations unfold (Glenn and Susskind 2010). To our knowledge, however, no study has specifically examined negotiation utterances to identify specific conversational tactics to increase power.

Practice Implications

We suggest that this study may have practical implications as well. Our findings suggest negotiators in lower power positions relative to their counterpart may wish to avoid certain conversational tactics. Specifically, our results suggest that negotiators would be wise to think twice about speaking in a patronizing, condescending, or extremely self‐promotional way and that they be careful how much information they reveal when they discuss negotiation process issues (i.e., proposing frames and guidelines).

This study has some significant limitations. First, this study explored the role of pre–first‐offer conversation on final negotiation outcomes, but we did not analyze the rest of the negotiation conversations. As Sara Cobb, David Laws, and Carlos Sluzki (2014) reported, the relational dynamics between two parties can change during a negotiation. In addition, because we only collected audio data, we were unable to analyze nonverbal behavior, which can have impacts on the negotiation power dynamics (Tiedens and Fragale 2003; Wheeler 2013)

Because of the qualitative nature of our study, our results lack statistical generalizability (McGrath 1982) and cannot be easily generalized to other populations or contexts (Burrell and Morgan 1979). Our research method and our sample present several significant limitations. First, the sample was not gender‐balanced and we did not distinguish among males and females in our analysis of the transcripts or of outcomes. Several studies have reported differences between men and women in both linguistic styles and negotiation discourse, particularly in relation to power status (see Kolb 2009 for a comprehensive discussion).

In addition, our study took place in South Korea and our sample was a homogeneous group of South Korean students. A large body of negotiation literature has examined the role of culture and national culture in particular on negotiation behavior, and several studies have explored the negotiation cultures of East Asia and Korea and how they differ from European and North American negotiation culture (see Brett et al. 1998; Brett and Okumura 1998; Movius et al. 2006). Reflecting these cultural differences, it is possible that patronizing behavior, for example, will have a different impact on North American negotiators than on Korean negotiators.

Finally, a major and obvious limitation of our study was our analysis of simulated rather than real negotiation transcripts. The role‐play that our subjects engaged in was designed for pedagogical purposes, as a training tool, and not to be used empirically.

In this study, we analyzed transcripts from a negotiation role‐play and identified five power conversation tactics that negotiators employed during the initial phase of negotiation: information seeking, patronizing, organizing, proposing, and sharing. From this analysis, we further developed the following typology for pre‐offer conversation scenarios: (1) gaining power through information seeking, (2) losing power through failed information seeking, (3) losing power through patronizing, and (4) losing power through sharing/proposing.

We next explored the relationship between these power‐conversation tactics and the anchoring effects of making the first offer in a negotiation, and found that only when participants successfully gained additional information were they able to overcome the other party's first‐mover advantage. Our analysis enriches and complicates our understanding of the anchoring effect of first offers and also provides insight on how negotiators seek to gain power in negotiation.

1.

Although it is ideal to have a 50:50 gender ratio, we had disproportionately more male students in the class.

2.

We defined first offer as whatever offer that was made for the first time during the exercise.

3.

The negotiation was conducted in the participants’ native language, Korean. Hence, we translated and back‐translated (Brislin 1970) the excerpts to English in order to include them in this article.

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