Beating the rival but losing the game: How the source of alternative offers alters behavior and outcomes in negotiation.

Abstract

Decades of negotiations research has emphasized the importance of having alternatives. Negotiators with high-value outside offers tend to have greater power and claim higher values in the focal negotiation. We extend this line of work by proposing that the source of alternatives-that is, who negotiators receive an alternative offer from-can significantly shape their negotiation behavior and outcomes. Specifically, we examine how negotiators' behavior changes when they face a counterpart who has an offer from their rival. Four studies demonstrate that this situation enhances negotiators' motivation to outperform their counterpart's alternative by reaching an agreement with the counterpart. This in turn leads the focal negotiator to make less aspirational first offers and eventually claim less value in final agreements. Our findings highlight the importance of considering the existing relationships among actors directly and indirectly involved in a negotiation, reveal a novel motive that can guide negotiators' behavior and outcomes, and uncover a previously unexplored negotiation strategy.