Bargaining zone distortion in negotiations: The elusive power of multiple alternatives

• Main Author: SCHAERER, Michael
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2015
• Subjects: Organizational Behavior and Theory
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/5783
• Institution: Singapore Management University

Negotiators have a natural preference for more over fewer alternatives. After all, alternatives seem to provide the necessary leverage to achieve superior negotiation outcomes (Study 1). The present research shows that although negotiating with multiple alternatives makes negotiators feel more powerful than negotiating with only one alternative, the exposure to multiple anchors can weigh down the size of their first offer and lead to worse outcomes. Building on recent research suggesting that the influence of anchors on subsequent judgments is best understood as a scaling effect, we propose a bargaining zone distortion theory of negotiations to explain the counterintuitive nature of multiple alternatives: the exposure to multiple alternative, as opposed to one alternative, distorts the subjective bargaining zone and makes a particular first offer appear more extreme, leading to a downward-adjustment of the first offer size. In our studies, we found that multiple alternatives lead to lower first offers than one alternative and that this relationship was mediated by negotiators’ biased perceptions of the subjective bargaining zone (Studies 2-4). This effect even held when the additional alternative was slightly better than the single one (Study 3), but disappeared when the alternatives did not span a range (Study 4), or when negotiators received linguistic cues about the extremity of their offers (Study 5). Importantly, multiple alternatives not only lead to lower first offers but also worse negotiation outcomes, and this effect was contingent on who makes the first offer (Study 6). We discuss implications for the negotiation, power, and anchoring literature.