Tuesday, January 14, 2014

The First-mover Disadvantage: The Folly of Revealing Compatible Preferences

LOSCHELDER D., SWAAB Roderick, TROETSCHEL R., GALINSKY Adam D.
Access the publisher's website Psychological Science 25, 4 (2014) 954-962

The current research establishes a first-mover disadvantage effect. We propose that making the first offer will backfire when senders reveal private information that astute recipients can leverage to their advantage. Two experiments manipulated whether the first offer was purely distributive or revealed that senders’ preferences were compatible with recipients’ preferences (i.e., negotiators wanted the same outcome on an issue). When first offers contained only distributive issues, the classic first-mover advantage occurred and first offers predicted final prices. However, a first-mover disadvantage emerged when senders opened with offers that revealed compatible preferences. These effects were moderated by negotiators’ social value orientation: proselfs were more likely to take advantage of compatible information than prosocials. Overall, the key factor that determined when the first-mover advantage versus disadvantage emerged was whether the offer revealed compatible preferences. These results demonstrate that first offers provide not only numerical value but also convey qualitative information.