A few weeks ago, the Harvard PONS blog posted an article outlining research findings that too many BATNAs may not be such a great thing. Entitled Negotiation Research: When Many BATNAs Are Worse than One by the PONS staff on July 22, 2021, it discusses a study by Michael Schaerer of INSEAD and his colleagues. In a series of experiments, they showed that those who had more than one “best alternative to a negotiated agreement” (aka BATNA) “… perceived the bargaining zone to be less advantageous and made less-ambitious first offers than those who had only one alternative.” (Id.)
In one experiment,
where participants had to sell a coffee maker to another participant, the less-ambitious first offers of those with multiple BATNAs resulted in worse outcomes as compared to those with just one alternative. These results were found regardless of whether the average price of the multiple alternatives was higher (e.g., $85, $80, and $75) or lower (e.g., $75, $70, and $65) than the price in the single-alternative condition ($75). (Id.)
While the researchers found “evidence that a range of offers serves as a more powerful anchor than a single offer in affecting our perceptions of the bargaining zone” (Id.), they also found that there were limits to this effect:
The researchers found that multiple alternatives reduce first offers only when negotiators thought about their first offers in purely numeric ways (e.g., “Should I ask for $90 or $85?”), rather than more descriptively (e.g., “Should I make a moderate or high first offer?”), and lead to worse outcomes only when participants made the first offer themselves rather than responding to a counterpart’s first offer. (Id.)
This blog post reminded me of a blog I wrote several years ago discussing the paradox of choice ; when given too many choices, the consumer has difficulty deciding. But, given a limited number of choices, the consumer is able to decide. That is, there is a sweet spot in which people are given not just one choice (i.e., “take it or leave it” which they will reject) but a limited number of choices providing them a semblance of control over their decision.
So—while perhaps having too many BATNAs may cause paralysis in choosing the best one, having at least one strong BATNA, and one as a backup or plan B is not such a bad thing. As the Harvard blog post notes, you should identify your strongest BATNA and focus on that one, keeping the others out of your mind (but definitely in reserve… just in case!!)
… Just something to think about.
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