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You're Robbing Yourself With Poor Haggling

So you believe you are a superior negotiator? A new study says you're probably wrong.

When you think that you have bargained for the best deal possible, chances are that you could have done even better, according to the study by professors Richard Larrick of Duke University's Fuqua School of Business and George Wu of the University of Chicago's Graduate School of Business. The results were recently published in the Journal of Personality and Social Psychology.

By studying the way students at the University of Chicago's Graduate School of Business negotiated when buying and selling, the professors found that both the buyers and the sellers believed that they did better and that they received much more of a concession from their opponents than they had given up. They believed that they had captured between 56% and 72% of the monetary value available, they really had only captured 50% of what was available. checked in with Larrick about the study and what consumers can learn from it.

TSC: What do you feel is the biggest factor contributing to people believing they negotiate better than they actually do?

Larrick: It is well known that people think that they are above average in a number of skills, such as driving a car. Just like Lake Wobegon , all the children -- and adults -- are above average. But we think our specific result is due to something more fundamental and more difficult to correct. The problem is that we rarely learn the truth about how far we could have pushed the price in a negotiation.
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