When to Offer $10,415.87 Instead of $10K for a Car

Precision bids don't work on experts
By Elizabeth Armstrong Moore,  Newser Staff
Posted Nov 11, 2016 8:05 AM CST
When to Offer $10,415.87 Instead of $10K for a Car
In this Thursday, Sept. 24, 2015, file photo, Volkswagen cars for sale are on display on the lot of a VW dealership in Boulder, Colo.   (AP Photo/Brennan Linsley, File)

(Newser) – If you've ever wondered whether to offer a specific or rounded bid when making a major purchase, scientists say they've got some answers, and it largely depends on the expertise of the person with whom you're negotiating. Reporting in the journal Psychological Science, researchers say that precise bids really only persuade novice negotiators, who read competence behind that decimal point. Experts, meanwhile, see that level of precision as over-compensating—unless it includes a detailed explanation as to why the bid is what it is. They call it "The Too-Much-Precision Effect." They reached this conclusion by conducting five experiments in which 1,320 experts and amateurs participated in real-estate, jewelry, car, and human-resources negotiations.

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In the real estate case, they watched 230 novice negotiators and 223 real-estate agents examine a listing—participants looked at the same pictures, floor plans, etc.—but the list prices ranged from only two precise digits (like $450,000) to eight precise digits ($452,375.52). Counter offers and reasoning were all documented. That's when the pattern emerged. "Pay close attention to your opponent's negotiation expertise," one researcher says in a Eureka Alert news release. "Amateurs seem to think: 'Oh, this number is so precise, my opponent must have thought quite a bit about a fair price." But experts "perceive this as too-precise a price and denigrate their opponent's competence." (Someone tried to sell a million-dollar Corvette for $700 on Craigslist.)

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