Study on successful negotiation on the Internet published

2023-08-10 Lüneburg. Many people are familiar with this situation: You want to enter into purchase negotiations, but you don't quite know which bid to go with. Scientists at Leuphana University Lüneburg have now analyzed 26 million eBay transactions for the first time to find out which approach promises the greatest success. One thing has become very clear: The idea that buyers and sellers usually meet in the middle of their opening bids is not true. The results of the study have now been published in the renowned journal Proceedings of the National Academy of Sciences (PNAS).

Leuphana authors of the study are research associate Hannes Petrowsky and professors David Loschelder and Burkhardt Funk. Co-author is Martin Schweinsberg from the ESMT Berlin. The researchers were interested in the question of how low a bid can be in a digital negotiation without the seller breaking off the negotiations. They did not examine auctions, but direct price negotiations between sellers and buyers. The focus was on the relationship between the bid amount, the final price and the probability of termination. The aim was to find out whether certain offers work better than others. An ideal offer ensures continued negotiations and combines a favorable, low final price for the buyer with a low probability of abandonment.

AI-powered analysis of eBay transactions showed that lower offers from buyers ultimately lead to a lower selling price. The probability of abandonment, on the other hand, does not increase uniformly: It also became clear that offers amounting to a simple fraction of the original price called, for example 50 or 75 percent of the amount asked, are particularly promising. The ideal offer that combines a low purchase price with a low probability of abandonment, averaged across all 26 million eBay transactions, is 80 percent of the asking price. However, this recommendation varies by product and demand from other buyers.

For the practical application of their recommendations on the level of initial bids in digital negotiations, the researchers have developed a practical, user-friendly homepage that anyone can access free of charge. The address is: