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

Journal Article
The authors 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). The authors 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).

Professor of Organisational Behaviour