Peculiarity of the Precise Number Effect: Efficacy of Precise Initial Offers on Pawn Stars Negotiations
Academic Article
Overview
Identity
Other
View All
Overview
abstract
Extensive literature on the anchoring effect demonstrates how powerful it is as a cognitive bias. It has been found to affect outcomes in nearly every setting tested. Anchoring is effective even when the anchor is absurdly disproportionate, when it is the result of a random event, when it is subtle, and when considerable time has passed from exposure to the anchor. The bias is so powerful that it remains even after one is explicitly warned of its effects. A subset of cognitive anchoring is the precise number effect, under which precise numbers (such as 986) have a greater anchoring effect than a round number (such as 1,000).This research utilizes a dataset of over 1,000 negotiations from the television show Pawn Stars. A first-of-its-kind Python computer program was created to measure the level of precision in the sellers initial offer to determine if it results in better negotiated outcomes. The counterintuitive findings provide valuable insight into the limits of the precise number effect specifically and cognitive anchoring generally. The results of this study have implications for topics such as inconsistencies in negotiation setting and subject matter, buyerseller experience disparities, buyerseller power dynamic disparities, subject-matter knowledge variability, nontraditional negotiation mindsets, and gender. Additionally, the difference between analyzing negotiation outcomes in a real-world setting compared to a theoretical survey with no consequences is discussed. The counterintuitive findings in this study will likely serve as a catalyst for replication with variation in future research into the topic. Furthermore, the novel framework implemented in this study will contribute to the future of both negotiation literature and cognitive bias literature by allowing for more nuanced analysis of the topic.
