Low-ball
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The low-ball is a
persuasion Persuasion or persuasion arts is an umbrella term for influence. Persuasion can influence a person's beliefs, attitudes, intentions, motivations, or behaviours. Persuasion is studied in many disciplines. Rhetoric studies modes of persuasi ...
,
negotiation Negotiation is a dialogue between two or more parties to resolve points of difference, gain an advantage for an individual or Collective bargaining, collective, or craft outcomes to satisfy various interests. The parties aspire to agree on m ...
, and
selling technique Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...
.


Overview


By buyers

When used by buyer, the low-ball is an offer for goods or services far lower than the price the buyer is willing to pay, made in the hope that the seller will at least counter-offer a price lower than the original asking price. Sellers looking to maximize profit but expecting would-be buyers to haggle may conversely make a "high-ball" offer and/or asking price. Eg:- A car buyer offers an unreasonably low price to a dealer, hoping to settle for a fair discount.


By sellers

When a seller makes a low-ball offer this means an item or service is offered at a lower price than what is needed actually for the desired profit margin to be realized. The seller makes the offer with the intent of quickly raising the price in order to increase profits and/or with the intent of selling would-be buyers additional, more profitable products and services. An explanation for the effect is provided by
cognitive dissonance In the field of psychology, cognitive dissonance is described as a mental phenomenon in which people unknowingly hold fundamentally conflicting cognitions. Being confronted by situations that challenge this dissonance may ultimately result in some ...
theory. If a person is already enjoying the prospect of an excellent deal and the future benefits of the item or idea, then backing out would create cognitive dissonance, which is prevented by playing down the negative effect of the "extra" costs. The converse offer from a buyer, a "high-ball" offer, is an offer at a price the buyer hopes is not quickly accepted, made with the intention of being replaced with a reduced price to pressure a reluctant seller. Eg:- Airlines offer cheap base fares but charge high fees for baggage, seat selection, and meals.


By taxpayers

Low-balling is also a form of
tax evasion Tax evasion or tax fraud is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to red ...
where a filer misrepresents the amount of taxable income on a tax return. It is most common in situations where the tax authorities reasonably expect taxable income to exist but cannot, without the taxpayer's cooperation, independently determine the amount for want of any reliable
paper trail ''Paper Trail'' is the sixth studio album by American rapper T.I., released September 30, 2008, on Grand Hustle Records and Atlantic Records. He began to write songs for the album as he awaited trial for federal weapons and possession charges ...
and/or other documentation. For example, most jurisdictions legally require taxpayers to report gratuities and pay taxes on the full amount. However, if a taxpayer receives all of his or her gratuities in cash, (s)he may low-ball on his or her tax return by declaring only a portion of the gratuities received. Unless the taxpayer has failed to disclose anything at all (or declared an unrealistically low figure), then without reliable documentation to prove any suspicions tax authorities and the governments they serve face a
dilemma A dilemma () is a problem offering two possibilities, neither of which is unambiguously acceptable or preferable. The possibilities are termed the ''horns'' of the dilemma, a clichéd usage, but distinguishing the dilemma from other kinds of p ...
– they can either choose not to pursue their suspicions or they can employ highly subjective and/or arbitrary enforcement methods (such as so-called "lifestyle audits") to provide legal basis to their claims. Either approach carries the risk of damaging public confidence in the integrity and/or fairness of the tax system with a segment of the population. Tax authorities employ various methods to deter such activities. For example, the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the Federal government of the United States, United States federal government, which is responsible for collecting Taxation in the United States, U.S. federal taxes and administerin ...
in the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
requires employers in industries where tipping is common to maintain meticulous records of all tips earned and to account for tips when calculating payroll deductions, and also levies heavy penalties against employers and employees alike in cases of noncompliance. Even absent such rigorous and targeted recordkeeping requirements, the increasing prevalence of tipping using electronic payment methods makes it far easier today for tax authorities to obtain credible evidence of low-balling compared to past years. Taxpayers able to claim deductions may sometimes "high-ball" these figures to low-ball their taxable income. For example, a taxpayer who is allowed to deduct fuel expenses may high-ball this write-off by also claiming fuel purchased for personal use. Especially if the taxpayer has falsified a mileage log and/or purchases personal use fuel from the same vendors (s)he uses for legitimate business fuel purchases (and obtains the same sort of receipts for both) then proving a taxpayer has illegally claimed such personal expenses can often be extremely difficult. In response, tax authorities suspecting such activities sometimes forgo criminal charges in favor of civil proceedings since these have a much lower standard of proof. To further deter low-balling, lawmakers in some jurisdictions have even enacted measures to apply
reverse onus Reverse or reversing may refer to: Arts and media *Reverse (Eldritch album), ''Reverse'' (Eldritch album), 2001 *Reverse (2009 film), ''Reverse'' (2009 film), a Polish comedy-drama film *Reverse (2019 film), ''Reverse'' (2019 film), an Iranian cr ...
in civil tax proceedings, meaning that when the tax authorities choose to pursue civil proceedings it is up to the taxpayer to prove that (s)he did not earn the disputed income and/or incur the disputed expenses legitimately and not the other way around. Eg:- A freelancer underreports cash payments received from clients to reduce taxable income.


Negotiation

In
negotiation Negotiation is a dialogue between two or more parties to resolve points of difference, gain an advantage for an individual or Collective bargaining, collective, or craft outcomes to satisfy various interests. The parties aspire to agree on m ...
, an ambit claim is an initial demand made over and above what is expected in counter-offers and settlement.


Studies

Cialdini, Cacioppo, Bassett, and Miller (1978) demonstrated the technique of low-balling in a university setting. They asked an initial group of first-year psychology students to volunteer to be part of a study on cognition. The researchers were clear about the meeting time being 7 a.m. Only 31 per cent (control group) of the first-year college students were willing to sacrifice and wake up early to support research in psychology. In a second group condition (lowballed group), the subjects were asked the same favour, but this time they were not told a time. Of them, 56 per cent agreed to take part. After agreeing to help in the study, they were told that they would have to meet at 7 a.m. and that they could back out if they so wished. None backed out of their commitment. On the day of the actual meeting, 95% of the lowballed group who agreed to participate showed up for their 7 a.m. appointment and 79% of the control group who agreed to participate. Hence, when people have already showed commitment it's least likely for them to back off as they have already made up their mind.


See also

*
Argument to moderation Argument to moderation ()—also known as the false compromise, argument from middle ground, fallacy of gray, middle ground fallacy, or golden mean fallacy—is the fallacy that the truth Truth or verity is the Property (philosophy), propert ...
*
Bait-and-switch Bait-and-switch is a form of fraud used in retail sales but also employed in other contexts. First, the merchant "baits" the customer by advertising a product or service at a low price; then when the customer goes to purchase the item, they disco ...
* Boiler room *
Compliance (psychology) Compliance is a response—specifically, a submission—made in reaction to a request. The request may be explicit (e.g., foot-in-the-door technique) or implicit (e.g., advertising). The target may or may not recognize that they are being urged ...
* Creeping normality * Door-in-the-face technique * Foot-in-the-door technique *
Nirvana fallacy The nirvana fallacy is the informal fallacy of comparing actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume there is a perfect solution to a particular problem. A closely related concept is the "per ...
*
Overton window The Overton window is the range of subjects and arguments politically acceptable to the mainstream population at a given time. It is also known as the window of discourse. The key to the concept is that the window changes over time; it can shif ...
*
Predatory pricing Predatory pricing, also known as price slashing, is a commercial pricing strategy which involves reducing the retail prices to a level lower than competitors to eliminate competition. Selling at lower prices than a competitor is known as underc ...
*
Selling technique Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...
* Setting up to fail *
Slippery slope In a slippery slope argument, a course of action is rejected because the slippery slope advocate believes it will lead to a chain reaction resulting in an undesirable end or ends. The core of the slippery slope argument is that a specific decisi ...
*


References


“The mindlessness of ostensibly thoughtful action: The role of "placebic" information in interpersonal interaction”
(pdf) * {{DEFAULTSORT:Low-Ball Persuasion techniques