The power of lost alternatives in negotiations

Having attractive alternatives is often seen as a sine qua non for negotiator success. Given that alternatives are not set in stone and are thus inherently probabilistic in nature, what happens if an alternative is lost? Across seven experiments (N = 2538), we demonstrate that losing an attractive alternative carries advantages compared to never having had this alternative. Specifically, negotiators who lose an attractive alternative set more aggressive aspirations, first offers, and obtain better outcomes. These advantages appear to result from negotiators anchoring their aspirations and first offers on the lost alternative. At the same time, because the attractive alternative is used as a reference point to evaluate the outcome, negotiators who lost an attractive alternative are less satisfied with the better outcome they obtain. The present research highlights the powerful influence lost alternatives have on how negotiators prepare, behave, feel, and perform in a negotiation.