Anchor Points, Reference Points, and Counteroffers in Negotiations

Based on the theoretical assumptions that counteroffers are generated through an anchoring-and-adjustment process and that offers are perceived as gains or losses relative to a reference point, predictions were made of how, in a price negotiation, the size of counteroffers vary with proposed selling prices and reservation prices. The predictions were confirmed in two experiments. In Experiment 1, 64 undergraduate students of business administration playing the role of buyers of condominiums were presented proposed selling prices and asked to give a counteroffer which a hypothetical seller would accept or reject. A reference point was induced by telling subjects their reservation price. Before giving a counteroffer subjects were asked to indicate whether it was higher or lower than an arbitrary anchor point. In four different groups of subjects, high vs. low reference point was crossed with high vs. low anchor point. The results showed as expected that the counteroffers were higher for a high than for a low anchor point, and higher for a high reference point when the anchor point was perceived as a gain than for a low reference point when the anchor point was perceived as a loss. In Experiment 2 in which another 48 undergraduate students of business administration participated, the anchor points were the proposed selling prices and the reference point (reservation price) was manipulated by providing estimates of the market price. The results were as predicted, thus suggesting that the proposed selling prices operated as anchor points and that the estimated market prices affected the reservation prices (reference points) so that the selling prices and estimated market prices jointly affected the counteroffers.     

Money substitutes and monetary policy in the U.K., 1922–1974

In the U.K., following the publication of the Radcliffe Report, it was widely believed that monetary policy was impotent because any attempt to make use of monetary policy would be fully offset by perfect money substitutes which were not controlled by the monetary authorities. This paper tests whether such substitutes exist. The technique is to fit a money demand function to a long run of data allowing the interest elasticity to vary from observation to observation, and using a procedure which permits infinite values of the elasticity. It was found that, although the elasticity does vary, no observation was consistent with the Radcliffe view. This was true for both interest rates tried, and the function proved very stable when tested. We conclude that the Radcliffe Hypothesis can be decisively rejected.     

The quarterly national accounts trend–cycle filter versus model–based filters

Abstract. In this paper, we first review the Spanish Quarterly National Accounts (Sqna) trend–cycle filter and give a formula to compute the first component of the filter that corrects an error in the expression that has been used in the Sqna System so far. Then, the results obtained with this last filter are compared to the ones obtained using the Tramo andSeats programs, which apply a model–based methodology. It is concluded that the {sc Sqna} filter presents some problems, such us the generation of spurious cycles, a phase delay, non–efficient initial conditions and larger estimation errors, which can be avoided if model–based filters are used. A Hodrick–Prescott filter with a suitable smoothing parameter is proposed to smooth trend–cycle series that are somewhat volatile and have been obtained with model–based filters. In this way, smooth signals can be obtained that are free of spurious cycles.