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Lowering the bucks for the bang: viewing pharmaceutical price negotiations through a behavioural lens

Published online by Cambridge University Press:  03 June 2019

ADAM OLIVER
ADAM OLIVER*
Affiliation:
Department of Social Policy, London School of Economics and Political Science, London, UK
*
*Correspondence to: Department of Social Policy, London School of Economics and Political Science, Houghton Street, LondonWC2A 2AE, UK. Email: a.j.oliver@lse.ac.uk
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Abstract

This article is a speculative perspective on the behavioural factors that may influence price negotiations between pharmaceutical ‘buyers’ and ‘sellers’. It is contended that several behavioural economic-related phenomena may affect price negotiations, including anchoring, loss aversion, a tendency (or otherwise) to reciprocate and a concern for one's reputation. The most important influence, however, is likely to be anchoring, which will particularly benefit the seller of a product if they are allowed to set the initial anchor in a price negotiation. Consequently, it is argued that the most effective way in which to counter the seller's anchor is likely to be to regulate so that the buyer makes the first offer.

Type
Article
Information
Behavioural Public Policy , Volume 5 , Issue 3 , July 2021 , pp. 417 - 428
Copyright
Copyright © Cambridge University Press 2019

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