By Matti Keloharju

What is the best way to start a negotiation about money: by offering a round sum, like $10, or a more precise one, like $10.20?

Many people gravitate toward the former. But is this actually the most effective way to get what you want? Petri Hukkanen of the Boston Consulting Group and I tested this question in an environment with a lot of money at stake: initial offers to acquire the majority of the shares of publicly traded U.S. companies. Analyzing a sample of nearly 2,000 cash offers by U.S. acquirers over three decades, we found that bidders tend to make round offers — much rounder than the prices at which stocks trade on the market. About half of all initial bids were made in increments of one dollar, such as $13 or $28 per share, and 14% in increments of $5, such as $10 or $25 per share. Only one-sixth of the bids were not made in increments of a quarter.

Read more [HERE].