Entrepreneurship & Innovation

In this paper we review the literature on first offers in negotiations. We explore the determinants of who will make the first offer, how extreme that first offer will be, what effect the first offer has on the value of the final outcome, and how first offers influence post-negotiation evaluations. The PDF attached here may not exactly replicate the final version published in the APA journal. It is not the copy of record. Copyright © 2001 by the American Psychological Association. Reproduced with permission.

We demonstrate that counterfactuals prime a mental simulation mind-set in which relevant but potentially converse alternatives are considered and that this mind-set activation has behavioral consequences. This mind-set is closely related to the simulation heuristic (Kahneman & Tversky, 1982). Participants primed with a counterfactual were more likely to solve the Duncker candle problem (Experiment 1), suggesting that they noticed an alternative function for one of the objects, an awareness that is critical to solving the problem.

In this article, the authors focus on impacts of tax rates and, in particular, tax progressivity on the decision to become an 'entrepreneur.' While a proportional tax with a full loss offset will not affect the entry decision for a risk-neutral individual, a progressive schedule with imperfect loss offsets can discourage entry. The authors find substantial evidence for this effect on entrepreneurship using variation in tax schedules faced by households in the Panel Study on Income Dynamics (PSID) over the period from 1979 to 1992.

Previous theories of financial market rationing focussed on a single market, either the credit or the equity market. An interesting question is whether credit and equity rationing are mutually compatible, and how they interact. We consider a model with two-dimensional asymmetric information, where entrepreneurs have private information about both the expected returns and the risk of their projects. We show that credit and equity rationing may occur individually or simultaneously.

Using 3 experiments, the authors explored the role of perspective-taking in debiasing social thought. In the 1st 2 experiments, perspective-taking was contrasted with stereotype suppression as a possible strategy for achieving stereotype control. In Experiment 1, perspective-taking decreased stereotypic biases on both a conscious and a nonconscious task.

Three experiments tested whether counterfactual events can serve as primes. The evidence supports the hypothesis that counterfactuals prime a mental simulation mind-set that leads people to consider alternatives. Exposure to counterfactual scenarios affected person perception judgments in a later, unrelated task and this effect was distinct from semantic construct priming. Moreover, these effects were dependent on the availability of salient possible outcomes in the person perception task.

In this study, 4 experiments demonstrated that priming effects depend on the context-appropriate meaning of the prime words. Most studies of semantic construct activation have presented prime words in contexts where the meaning of each word was invariant. The authors used words in contexts that supported either literal or figurative meanings, and found that only the context-appropriate meanings had subsequent priming effects on person-perception judgments.

The research in this article examined the consequences of a failed attempt to reduce dissonance through a self-affirmation strategy. It was hypothesized that disconfirming participants' affirmations would reinstate psychological discomfort and dissonance motivation. In Experiment 1, high-dissonance participants who affirmed on a self-relevant value scale and received disconforming feedback about their affirmations expressed greater psychological discomfort (Elliot & Devine, 1994) than either affirmation-only participants or low-dissonance/affirmation disconformed participants.