kudos to your friend, but signalling your intent to leave is red flag for management

often times companies will opt to pay more as a stop-gap until they find a cheaper replacement

I honestly think this is a myth propogated by managers to discourage negotiation

They know the game, no employee ever is going to stay if they're being paid half their market value. "Commitment" my ass lol. But more to the point in order to replace you they have to pay market value for your job. They can only find someone cheaper if your job is beneath you.

Parlaying offers is fine as long as the work they need doing is worth that money. Who are they going to replace you with? Hiring is expensive even if they find a sucker. The only risk is if your market value is higher than they need to pay to get your job done.

maybe, i'm not saying employees shouldn't negotiate but there's a lot of ways it can backfire so you might be better of hopping to another company at that point, rather than waiting around to have the rug pulled out from underneath you

I agree, but it's still cheaper to counteroffer than to hire someone new if the demand is market price for that job. There's big overhead in replacing you.

Fundamentally the operative variable is: "can they get your job done for less than you're demanding." That's what matters, more than the impression of commitment.

Only if the company realize your important.