Bargaining Zone Distortion in Negotiations: The Elusive Power of Multiple Alternatives

54 Pages Posted: 20 Jan 2017

Date Written: Novemeber 2016

Abstract

We challenge the assumption that having multiple alternatives is always better than a single alternative by showing that negotiators who have additional, less attractive alternatives ironically exhibit downward-biased perceptions of their own and their opponent’s reservation price, make lower demands, and achieve worse outcomes in distributive negotiations. Five studies demonstrate that the apparent benefits of multiple alternatives are elusive because multiple alternatives led to less ambitious first offers (Studies 1-2) and less profitable agreements (Study 3). This distributive disadvantage emerged because negotiators’ perception of the bargaining zone was more distorted when they had additional (less attractive) alternatives than when they only had a single alternative (Studies 1-3). We further found that this multiple-alternatives disadvantage only emerges when negotiators used quantitative (versus qualitative) evaluation standards to gauge the extremity of their offers (Study 4), and when they base their offers on own numerical alternative(s) versus on opponent information (Study 5).

Keywords: Negotiations, Alternatives, Multiple Alternatives, BATNA, Bargaining Zone, First Offer, Power, Anchoring, Scale Distortion

Suggested Citation

Schaerer, Michael and Loschelder, David and Swaab, Roderick I., Bargaining Zone Distortion in Negotiations: The Elusive Power of Multiple Alternatives (Novemeber 2016). Organizational Behavior and Human Decision Processes, Vol. 137, p. 156-171, Nov. 2016. Available at SSRN: https://ssrn.com/abstract=2901893

Michael Schaerer (Contact Author)

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

David Loschelder

Leuphana University of Lueneburg ( email )

Scharnhorststraße 1
Wilschenbrucher Weg 69
Lüneburg, 21335
Germany

Roderick I. Swaab

INSEAD ( email )

Boulevard de Constance
77305 Fontainebleau Cedex
France

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