When people are negotiating, they generally feel more comfortable when they have a back up offer. It is common to hear people say, “Worst case scenario, at least I have…”

You might expect that having an offer in hand would make you a better negotiator. After all, you can be a little aggressive when you know that you have a live option. You know that you won’t be left with nothing.

A paper in the February, 2015 issue of Psychological Science by Michael Shaerer, Roderick Swaab, and Adam Galinsky suggests that sometimes it is actually better to have no alternatives at all.

They suggest that when someone has a weak alternative, that is worse than having no alternative at all. The problem with the weak alternative is that it affects the way people negotiate in the future by providing an anchor for the negotiation.

A lot of research on going back to the work of Kahneman and Tversky shows that people use numbers in their environment as the basis of judgments. Then, they adjust those numbers based on circumstances. Often, however, they don’t adjust enough.

In the case of alternatives in a negotiation, the backup offer provides an anchor. People ask for more than the existing offer gives them, but they don’t ask for enough more.

In one study, participants were told to imagine that they were trying to sell an old compact disc to a person. One group was told that they had no other offers. A second group was told that they had a weak alternative offer. Someone was willing to give them $2 for the CD. A third group had a strong alternative offer. Someone was willing to give them $8 for the CD. Participants were asked whether they felt like they could negotiate from a powerful position and were asked how much they were going to ask for the CD in the negotiation.

Participants who had no alternative felt least powerful. Those with the strongest alternative felt most powerful, while those with the weak alternative came out in between. Interestingly, the people with the weak alternative gave a lower initial offer (about $4.50) than those who had no alternative (who asked for about $7.50). Those with a strong alternative asked for the most money (about $11.00).

Other studies in this series actually had people negotiate with a partner. The initial offer affected the final agreement. So, people with no alternative asked for more money initially and ended up with a better agreement than those with a weak alternative.

One additional study made clear that this effect had to do with on the alternative offer. In this study, participants were negotiating with someone else over the purchase of an antique sugar bowl. As in previous studies, the seller had no alternative offer, a weak alternative, or a strong alternative. All participants were given information about how much antique sugar bowls are usually worth. The seller made the first offer. Some participants were instructed to think about their alternatives, while others were instructed to think on the final price they hoped to get. The idea was that the instructions would suggest the anchor for the negotiations.

Participants instructed to focus on their alternatives showed the same pattern as in previous studies. Those with a weak alternative asked for less money and ultimately negotiated a worse agreement than those with no alternative at all. However, those told to focus on what they hoped to get for the sugar bowl asked for about the same amount in each condition and their final agreement was just about as good in all of the conditions.

These studies are a great reminder of the power of to influence the way we determine the value of things. It is often difficult to know objectively how much things are worth. We often use the numbers we encounter to constrain our judgments of value. With weak alternatives, we assume that the alternative sets the minimum value for an object or opportunity. We adjust upward, but we do not adjust upward highly enough.

Ultimately, when you are in a negotiation situation, you should try to focus on what you hope to get rather than on the offers you have in hand so far. That focus will help you to make the right initial offer.

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