In Generous Offers I Trust: The Effect of First-Offer Value on Economically Vulnerable Behaviors

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 outcomes. In our research, we identified a surprising consequence to this common prescription. Through four studies in the field and laboratory (total N = 3,742), we explored how first-offer values affect the recipient’s perceptions of the offer-maker’s trustworthiness and, subsequently, the recipient’s behaviors. Specifically, we found that recipients of generous offers are more likely to make themselves economically vulnerable to their counterparts, exhibiting behaviors with potentially deleterious consequences, such as disclosing negative information. We observed this effect in an online marketplace (Study 1) and in an incentivized laboratory experiment (Study 3). We found that it is driven by the greater trust that generous first offers engender (Studies 2 and 3). These results persisted in the face of debiasing attempts and were surprising to lay negotiators (Studies 3 and 4).