In a new study, researchers found that flattering the seller of a second-hand product can help lower the asking price of the product.
According to a new study, people generally tend to sell a product they previously bought at a higher price due to something they call the "endowment effect." They tend to quote a higher price for the product than they would be willing to pay to purchase the same product. They do this in fear of an impending loss.
"When consumers consider selling a product they own, they feel threatened by the impending loss. In order to counter this threat, they increase the product's value," write authors Promothesh Chatterjee (University of Kansas), Caglar Irmak (University of Georgia), and Randall L. Rose (University of South Carolina) in a press release.
For the study, a group of voluntary participants were assigned to either a seller or buyer role. Each of them was given a mug. All sellers were told they could either keep it or sell it while buyers were asked to evaluate the mug. Then both sellers and buyers were shown a series of words on a computer screen consisting of threat-related words (endanger), neutral words (wood), and non-words (tlun). Sellers responded to threat-related words much quicker than buyers, and this difference in their response time led to significantly higher selling prices compared to buying prices.
Researchers concluded that sellers generally feel more threatened when parting with even their least valuable possession. Hence, complimenting and flattering them reduces this level of threat, allowing them to sell their possession at a lower price.
"Affirming a seller leads to elimination of the endowment effect. Buyers may want to affirm sellers to make them feel less threatened by the loss of a possession and therefore willing to set lower prices. Next time you are buying a second-hand car, for example, you may want to start the negotiation by telling the car owner what a wonderful family she has," the authors concluded.
