I hate these hypotheticals on negotiations. They don’t work unless you come across a “rational” player and the world is full of irrational people. For example, one lowish starter bid could cut you out of the whole process. Now what? You followed a stupid MBA advice and you shot yourself in the foot. Great job!
This strategy works because people are irrational. The round number vs. not round number are not that different, but they are perceived differently b/c we're all a bit irrational.
Pricing is a tricky process of course, but you also shouldn't be over paying or under charging if selling. It's perfectly ok to get cut out of the process in those cases.
I personally think it's rational to perceive a round number and a precise number differently. I suggest the problem isn't that we're all a bit irrational, but that we try to apply reason to an irrational process.
You have to be willing to walk away to get a good deal. If you’re not willing or can’t take the risk then these strategies aren’t going to be in your interest
Anecdata: I bid 90% of asking price on a house a month ago. Owner got offended (as I was told by my agent) and didn't counter. He then lowered the asking price to 93% of the original. Still didn't counter even though his new asking price wasn't far from what I had offered initially. House is now pending.
I think this idea of a seller being "offended" is far more a fiction in a buyer's mind than actual reality. Think about when you are selling something. Does a too low initial offer offend you and make you unable to evaluate a more reasonable subsequent offer by that person?
