When it comes to offering and considering choices in a negotiation, the more the better, right? In fact, the presence of too many options may actually hamper people from coming to any agreement.
A study from the decision-making realm supports this conclusion. Draeger’s Market in Menlo Park, Calif., is renowned for its wide selection of gourmet foods, including 75 kinds of olive oils and 250 different mustards. In a field experiment at the store, researchers Sheena Iyenger and Mark Lepper set up a jam-tasting booth, one weekend offering six varieties, another weekend offering 24 varieties.
The larger selection did attract more tasters: 60% of shoppers sampled the jams when 24 varieties were available compared with only 40% when six varieties were available. Remarkably, however, the number of options had the opposite effect on purchases. Only 3% of the shoppers bought any jam from the well-stocked booth; by contrast, nearly 30% of the shoppers who were given a small number of choices made a purchase. The supermarket sold much more by offering less.
Similar results have been found with other products and services. Well-intentioned attempts to give employees more options for investing their 401(k) retirement accounts actually seem to backfire; increasing the number of funds discourages people from choosing any one of them.
What does “choice overload” imply for negotiations? Before approaching the bargaining table, you need to think hard about your priorities and tradeoffs. Doing so allows you to imagine creative options and respond the moment new proposals arise. As long as they aren’t utterly unrealistic, ambitious goals can have a self-fulfilling effect.
At the same time, it’s important not to get bogged down in comparing hypothetical deals before you’ve even met with the other party. Maximizers, as behavioral economists call them, are particularly prone to this trap. Psychologically driven to seek the best possible outcome, these perfectionists leave no stone unturned when preparing for talks. In the process, maximizers waste time, and their goals often come at a high economic and emotional cost. Furthermore, maximizers’ abstract judgments prior to negotiation may not match their real-world choices.
By contrast, satisficers rely on shortcuts and rules of thumb when sorting through various options. In doing so, they’re better able to cut to the chase. Their chosen course of action may not be the very best, but it won’t require a monumental effort to launch. Studies show that satisficers end up happier with their outcomes than do maximizers.
This research suggests two lessons for negotiation preparation. First, when setting goals, “don’t let the perfect be the enemy of the good.” Weighing countless options costs time and money. Second, treat your goals and tradeoffs as provisional starting points. You can update your preferences and options as they emerge during the negotiation.
Adapted from “Too Much of a Good Thing? The Role of Choice in Negotiation” by Michael Wheeler, Professor, Harvard Business School.