Defusing the Exploding Offer: The Farpoint Gambit

Abstract

Exploding offers, as opposed to normally expiring offers, are coercive, ethically questionable tactics where very often, a more powerful offeror places unreasonable pressure on an offeree to accept the deal on the table. Such offers typically "explode" or disappear in an unacceptably and arbitrarily short time frame. The offeror uses such techniques to preclude the offeree from considering other options, and to conclude the transaction expeditiously. This article discusses the way exploding offers work, why they are ethically questionable, and offers a technique-The Farpoint Gambit-as a means to defuse this strong-arm tactic.

JEL Classification: D79