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DETERMINANTS OF A NEGOTIATOR’S INITIAL OPENIG OFFER

MarcBuelens Dirk Van PouckeGhent University

ABSTRACT:Althonug the initial offer is a crucial aspect in the process of most negotiations, there is still an complete lack of empirical evidence on what under pins initial offer decisions. For this reason, theeffects of different reference points on the negotiator’s initial offer were examined in this study. Results from a sample of 596 managers indicate that knowledge of the opponent's best availablealternative, or (Best Alternative To a Negotiated Agreement BATNA ), is by far the strongest determinant. Criteria of fairness, as reflected in an estimated market price , are also important. However,awareness of the dependency of the other party has no direct effect on the initial offer. Apparently, negotiators define the negotiation game as the managemet of interdependency in an extremelyagocentric way and their opening offers largely on cues regarding the power structure within the dyad.

KEY WORD: negotiation; reference points; initial offer; power ; fairness.

How do negotiators decideon their initial offer? This extremely simple and straightforward question remains largely unanswewed. The absence of an answer is even more superprising when we realize that over the last 20 years,decision –making has been placed at the heart of nthe Bies, Lewicki, & Sheppard; Thomson, Peterson, & Kray, 1995). The question is certainly not a trivial one. We enter ,most negotiations with the...