Concessions in Negotiations : The Roles of Initial Assessment and Signaling on Outcomes of a Negotiated Agreement

This study explores the roles of calibrated (annual vs. hourly wage) positions on negotiators' expected contentiousness and estimation of reservation price on negotiators' initial offers and final outcomes. In a distributive labor negotiation, we found negotiator determinations of reservation prices served as an anchor such that the more ambitious their reservation prices, the less they conceded in opening offers. In addition, we found when wage rates were calibrated to reflect annual, rather than hourly earnings, negotiators anticipated a contentious negotiation. Those anticipating contention made less concessionary initial offers. We also found that the more concessionary their opening offer, the less successful their outcome, but the lower their negotiation costs (strike days). Concessions in the opening offer might serve as a partial mediator of reservation prices. In the ongoing of negotiation process, negotiators conceded more when they expected their counterparts' offers have been close to counterparts' reservation price. Taken together, this study demonstrates the importance of preparation processes, including the impact of initial assessments of the negotiation and the signaling effect of their opening offers. Most current research explores the impact of the on-going process or the personal (conflict style) and contextual factors that impact negotiator outcomes. This study looks at aspects of the preparation, such as developing target and reservation prices and the initial offers, as well as the impact of calibrated (annual vs. hourly wage) positions on negotiation outcomes and processes