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Anchoring In Negotiations In India


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Anchoring In Negotiations In India

  1. 1. Anchoring & first offers in Negotiations in India
  2. 2. Anchoring is a phenomenon observed in negotiations
  3. 3. In making an offer in a negotiation, people often start with some initial value in their mind ( an anchor) and adjust from this anchor to make a final estimate
  4. 4. Mental math in negotiations Anchor Add or subtract Adjustment
  5. 5. Anchors can be set internally or externally
  6. 6. Internal Anchors <ul><li>First offer </li></ul>
  7. 7. External Anchors <ul><li>Past experience </li></ul><ul><li>Market information </li></ul>
  8. 8. My experiment: The island of Dinna Cay in Bahamas listed for sale on private islands online at a price of $795,000
  9. 9. 132 business professionals were split in 3 groups In Delhi, Chennai, Bengaluru, Mumbai
  10. 10. Each group got a different asking price for the island <ul><li>Actual Price Online $795,000 </li></ul><ul><li>Mark up Price $1,033,500 </li></ul><ul><li>Mark down Price $556,000 </li></ul>
  11. 11. They were asked to negotiate by using written quotes Each person got a chance to submit 2 quotes
  12. 12. In uncertain negotiations the final deal price usually comes close to the Anchor. If you set the anchor you end up controlling the deal even before negotiation starts My hypothesis
  13. 13. Bid Spread for Mark Down Price
  14. 14. Bid Spread for Mark Up Price
  15. 15. Bid Spread for True Price
  16. 16. Hypothesis seen to be confirmed in bid spreads across Indian Cities: the first offer sets the anchor for the final deal price in most of the cases Data for Gujrat, West Bengal to be included in a few months
  17. 17. To Know More <ul><li>Call us at </li></ul><ul><ul><li>991-080-5964 </li></ul></ul><ul><ul><li>011-4141-7675 </li></ul></ul><ul><li>Mail us at [email_address] </li></ul>To Know More