If you are going to be asking for a raise anytime soon, you better come to the bargaining table prepared and informed, new research suggests.
That research found that having a specific number in mind when negotiating everything from salary to major purchases is more effective than negotiating with a round number.
"What we discovered is there is a big difference in what most people think is a good strategy when negotiating and what research shows is a good strategy," said Malia Mason, the Gantcher Associate Professor of Business at Columbia Business School. "Negotiators should remember that in this case, zeros really do add nothing to the bargaining table."
To prove this, researchers Mason and Daniel Ames along with doctoral students Alice Lee and Elizabeth Wiley of Columbia Business School split a group of more than 1,200 respondents into two negotiation groups. One of those groups was asked to negotiate using a round number like $5,000 while the other group was asked to negotiate using a specific number like $5,015.
Negotiators who had that specific number in mind were thought to be more educated about the value of the negotiation. That in turn led to more concessions because the opposite negotiating party felt there was less wiggle room in the negotiation.
"The practical application of these findings – signaling that you are informed and using a precise number — can be used in any negotiation situation to imply you've done your homework," Mason said.
The research was a part of the paper "Precise Offers Are Potent Anchors: Conciliatory Counteroffers and Attributions of Knowledge in Negotiations," which will be published in the upcoming issue of the Journal of Experimental Social Psychology.