How and Why Different Forms of Expertise Moderate Anchor Precision in Price Decisions

Area of Science:

• Behavioral Economics
• Negotiation Psychology

Background:

• Anchor precision influences negotiation outcomes, with amateurs benefiting from precise anchors.
• Previous studies on experts focused on negotiations within their domain, leaving the impact of precision outside their expertise unknown.

Purpose of the Study:

• To replicate the 'too-much-precision' effect in expert negotiators.
• To differentiate whether general negotiation expertise or domain-specific knowledge drives the backfire effect of precise anchors.
• To investigate the role of perceived competence in the anchor precision effect.

Main Methods:

• A pre-registered study involving 400 professional real-estate agents.
• Agents negotiated prices for objects either within (houses) or outside (motor yachts) their expertise.
• Key metrics included willingness to pay (WTP), counteroffers, and self/other-ascribed competence and price-knowledge.

Main Results:

• The study replicated the advantageous anchor precision effect.
• Excessive price anchor precision negatively impacted expert negotiators irrespective of whether the negotiation was within or outside their domain.
• Mediation analysis indicated that attributed competence to the negotiation opponent underlies the effect of precise anchors.

Conclusions:

• The 'too-much-precision' effect in negotiations applies to experts even when dealing with unfamiliar domains.
• Perceived competence of the counterpart is a key psychological mechanism driving the impact of anchor precision.
• Findings enhance theoretical understanding of anchoring effects and negotiation dynamics.