A quick word first
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The poetry of decision making
My friend Jack has had great success over the years in his professional career and in his life in general. Yet he says of himself: “Do I have trouble making decisions? Well, yes and no.” Perhaps you know people like that. Maybe sometimes you’re like that yourself.
Robert Frost’s classic—and often misread—poem, “The Road Not Taken,”1 features a man who can’t make up his mind. The narrator recalls walking in a yellow woods and coming to a place where the road diverged and he couldn’t “travel both and be one traveler.” He had to take one path or the other (just as when a negotiator must choose between two competing offers).
Frost’s narrator stood there for a long time gazing down both roads as far as he could see. He finally chose one “because it was grassy and wanted wear.” But some readers miss the significance of the next two lines: “Though as for that the passing there, had worn really about the same.” The fellow acknowledges there was no way to distinguish the two options, or to know what he’d encounter going one way or the other.
Then he imagines that somewhere ages and ages hence, he will be telling this story. And with a sigh: “I took the one less traveled by, and that has made all the difference.” What we don’t know, however, is whether that’s a sigh of regret for where that road led, or a sigh of gratitude for the good luck that came from the taking that path.
Uncertainty makes us hesitant, whether we’re ambling through the woods or we’re negotiating and have to choose between alternative deals. Often in both settings, only in hindsight can we know whether our decision was good or bad.
Confusing your customer and losing the sale
You may not be doing parties you negotiate with a favor by offering them a lot of choices. My college classmate Paul Ehrmann has had a fascinating and fulfilling life as an actor/screenwriter. He’s not famous, but he’s worked with some of the biggest names in Hollywood.
Roles come in fits and starts, of course. When things were slow, he paid his rent by taking other jobs, including at one time, being a car salesman.
Paul being Paul, the cars that he sold were Rolls-Royces on Wilshire Boulevard in Beverly Hills. That experience taught him an important negotiation lesson:
When you pull out the color chart, you’ve lost the sale.”
Research shows that people freeze up when they have too many options. Columbia psychologist Sheena Iyengar, author of The Art of Choosing, did a famous experiment at a California gourmet shop. She had the proprietor set up a sample table where shoppers could test different kinds of jam. When there were 24 varieties to choose from, more customers stopped at the table—but fewer people actually bought anything than when only 6 were available.
It’s partly a problem of information overload. But as Iyengar explains, it’s also a matter of anticipated regret. The more paths people could take, the more reasons they have to second-guess whichever one they choose. If a restaurant offers only steak, salmon, or pasta with tomato sauce, you pick one of those three with little second guessing. But if there are dozens of tasty items, choice becomes much harder.
For negotiators, this presents a real quandary. In theory, expanding the number of issues under discussion allows us to invent options and expand the pie. That’s true, but in practice, DePaul University’s Charles Naquin, co-author of The Essentials of Job Negotiations, has found that although having more issues to trade on does generate more value, people are more dissatisfied with their results! Apparently they brood about whether they overlooked even better creative solutions.
There’s no magic solution to this dilemma. We have to balance the upside of potential value creation with the downside of making things too complicated.
Avoiding that trap ourselves
We face the same kind of dilemma when we prepare to negotiate. Say you’re job hunting and have an attractive offer in hand. But another company also seems eager to hire you. Good for you. If the positions are similar and both firms in are the same place you’re living, then maybe it will mostly come down to compensation and opportunity for advancement.2 Still, like the person in Frost’s poem, you may hesitate before heading down one path or the other.
Now let’s ramp up the pressure. Say there’s a third offer. (Everyone knows you’re a potential superstar.) In many ways, this one significantly better than the other two, except for one thing. It requires moving to another state. You’ll have to weigh the pluses and minuses of doing that. And that raises more uncertainties; some of them are about intangibles. How much of hassle will it be to move? How exciting might it be to be in a new place? It’s easy to understand why people freeze up in such cases.
On top of that, there may be a weird cost to holding not one bird in your hand, but many. There’s research that shows that having multiple alternatives can actually prompt you to demand less from your counterpart, even though you might think that having lots of fallbacks would make you bolder.3
Again, no easy answers. But there comes a point where you’ll do better by trimming your decision tree, cutting off some of the branches, appealing as they may be, and focusing on the very best (or least worst) of your nonagreement options.
Far better to do that before you sit down to negotiate, rather than carrying all that unresolved baggage to the bargaining table.
Housekeeping
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Here’s a link for the full text of the poem.
Though even in that situation, you may also have to weigh other factors like the chance to work from home, the culture of the place, and the resources you’ll be provided to do your job well.
The authors acknowledge that this effect may only apply in so-called “distributive” negotiations, where money is the only issue on the table. See Schaerer, M., Loschelder, D. D., & Swaab, R. I. (2016). Bargaining zone distortion in negotiations: The elusive power of multiple alternatives. Organizational Behavior and Human Decision Processes, 137, 156–171.
Thanks for the comment, James! I'm by no means an expert on comparison shopping, but I wonder if you can keep a contract offer short and sweet, it might look a lot better than a laundry list from a competitor that goes on and on. As for the jam experiment by Sheena Iyengar, I'll double down on my recommendation of The Art of Choosing by her. Folks should also look for her TED talks and other videos.
I’ve always loved the jam study. Would it be beneficial to package your offerings in a limited-selection format, while outlining your counterpart’s BATNA possibilities in an extensive-selection format? I’d imagine this could make your offering easier to choose in the right situation.