Researchers from Columbia Business School say that using precise instead of rounded numbers will give you a "potent" anchor for the counter offer.
But why does a precise figure elicit a better counter offer than a round number?
Malia Mason, lead researcher for the study, says that negotiating with precise, specific numbers will lead the other party to believe that you've done some research into the number you've decided on.
For example, if you say that there are 103 people in line, a s opposed to stating a more general figure like 100, the listener will assume that you counted every one of those people.
"What this all suggests is that the level of precision at which a speaker chooses to convey a quantitative estimate — as '7 days' versus '1 week' — signals to message recipients the magnitude of error around the estimate they should expect," said Mason. In short, the more precise the number, the more likely you'll appear to be correct.
Mason, who teaches a course in managerial negotiations at Columbia, got the idea to study the effects of round versus precise numbers when she was taking a cab in Prague and noticed the arbitrary prices. She decided to set up a few experiments to test how the different types of numbers affect negotiations. In one experiment, Mason had 130 people negotiate the price of a used car, and found that those who gave a round number ended up paying $2,963 more than those who were more specific about their price from the beginning.
But how specific should this anchor number be? You don't want to be so extreme that you shut down your counterpart at the beginning of the conversation.
You should replace "at least some of the trailing zeros in a round offer ($200,000) with significant digits ($205,000) and you should look for opportunities to signal that you've done your homework," Mason said.
The study will be published in July's issue of The Journal of Experimental Social Psychology.
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