Trust and Anchoring in Negotiation

This paper develops and tests hypotheses about how and why trust affects anchoring in negotiation. Three experiments show that the reputation of the negotiator making the first offer affects judgments of the trustworthiness of that negotiator, perceptions of the fairness of that negotiator’s first offer, anchoring – the level of the counter offer relative to the first offer, and final settlement price. These studies contribute new insights into the negotiation literature on trust and anchoring. First, they reveal the Achilles heel of high trust – trusting negotiators are more likely to be anchored than negotiators who do not trust. In contrast, these studies reveal that low trust buffers negotiators from being anchored. Second, these studies add trust to the growing list of factors that research is revealing factors that can buffer negotiators from anchoring. Third, these studies explain that the buffering effect of low trust is due to the judgments that low compared to high trust negotiators make about the first offer. Low trust negotiators judge first offers as more extreme than high trust negotiators.