The use of information versus asking price in the real property negotiation process

Abstract

This paper examines the use of asking price in the real property negotiation process and whether it can potentially bias results. Theoretical work on the limited processing capacity of the human mind suggests the research hypothesis that negotiators will devalue difficultly processed critical information in favour of cognitive shortcuts (called heuristics) such as asking price. The analysis of data gathered through a series of experiments revealed that the manipulation of asking price led to the manipulation of both buyer opening offer and eventual settlement prices, thus indicating the use of asking price as a shortcut and its strong potential as an agent for bias.