In high offers I trust: The effect of first offer value on economically vulnerable behaviors

Keywords: negotiation; trust; interpersonal perceptions; disclosure

Abstract: Negotiation scholarship espouses the importance of opening a bargaining situation with an aggressive offer, given the power of first offers to shape concessionary behavior and final outcomes. In the present research, we identify an important countervailing force to the benefits of aggressive first offers. Namely, we find that negotiators who make more generous first offers are seen as more trustworthy by their counterparts. These perceptions of trustworthiness in turn lead offer recipients to engage in economically vulnerable behaviors, such as the disclosure of negative information. We find these effects across four studies in the field and laboratory, across a variety of contexts, and with real incentives. While negotiators recognize that engaging in vulnerable behaviors can be economically disadvantageous, neither first offer-makers nor recipients are able to predict that the value of the first offer will increase the likelihood of such behaviors.