The Effects Of Product Confidence And Reference Price On Negotiation Processes And Outcomes

As a result of market competition, negotiation has been an important component of business in reaching a mutually accepted and win-win outcome. Some relevant research literatures indicate that product confidence and reference price are important psychological variables of negotiation. Based on the Kahneman's "Anchoring-and-adjustment" negotiation model and Locke's Goal Setting Theory, this study is designed to explore the impact of product confidence and reference price on negotiation behaviors and the mediation process of target price.The laboratory experiment is conducted with a simulated negotiation task. 32 pairs of students registered for Bachelor and Master Degrees participated in the experiment by playing the roles of seller and buyer. The independent variables of product confidence and reference price are manipulated by providing the subjects with various in information about the product.The data analysis shows the following results:(1) Product confidence and reference price seem to have no direct impacts on the outcomes of negotiation. But they have direct relationship with negotiation behavior as disclosing, arguing and analogy.(2) There is significant relationship between the reference price and target price. Specifically, higher reference price induces higher target price.(3) There is significant effect of target price on such subject's negotiation behaviors as arguing and analogy, and thus on negotiation outcomes. A low rate of negotiation agreement is reached in the condition of high target price. However the price of the agreement with higher target price is significantly higher than in the lower target price cases.(4) Concession strategy is also closely related with negotiation agreement. The small-step concession strategy causes more agreements..(5) Negotiators' satisfactions with negotiation outcomes and with partner aresignificantly higher when both make agreement than they cannot reach an agreement. Negotiator's satisfaction with himself has no relationship with the agreement. In addition, negotiators' satisfactions with negotiation outcomes and with partner are significantly higher when win-win strategy is perceived. Negotiator's satisfaction with himself has no relationship with strategy perception...