Business School Research Roundup: April 30 2015

A study carried out by a research team from the Rotman School of Management, led by Dr Sonia Kang, has found that those in positions of low power may perform better in high-stakes negotiations by using self-affirmation techniques. A three-stage experiment culminated in an exercise involving a simulated sale in which the sellers were in a position of power, with the stakes raised by informing the participants that their negotiation skills were being gauged. Before the experiment, half of the participants were asked to write for five minutes about their best negotiating skill, the other half about their worst. The buyers (the position of lower power) who had written about their best skill fared considerably better when it came to negotiating a lower price. Writing down the affirmation is likely to be more effective than just thinking it, Kang said, but the thought alone would help – the affirmation doesn’t even need to be connected to the situation at hand.

Research from professors at Chicago Booth, the Karlsruhe Institute of Technology and Berkeley Haas has found that consumers are more ready to spend in the short term if they expect that higher inflation is on the horizon. Using data from Germany between 2000 and 2013, they found that household spending on consumer durable goods increases if the value of money is expected to decline – getting the most of bang from their buck, if you like. This is a widely accepted theory (the bond-buying program of the European Central Bank is seen as an example of institutions attempting to leverage this tendency), but the research plugs a gap in terms of empirical evidence.