Chapter Three

The Psychological Cost of Too Many Choices in Negotiation: How Abundance of Options Leads to Regret

How do we measure success in negotiation outcomes? Is it determined by good performance during the negotiation process and meeting profit expectations? Or is it by the parties’ willingness to sit down again for future negotiations? If a negotiator gains economically from a chosen option but feels psychological dissatisfaction, can we still consider the negotiation a success? 

Success in negotiation isn’t just about economic gains—it also involves post-negotiation satisfaction.

Researchers Richard Oliver, Sundar Balakrishnan, and Bruce Barry have categorized negotiation outcomes into two types: economic outcomes, which are the objective allocations of resources, and social psychological outcomes, which refer to the subjective social perceptions held by negotiating parties afterward. While most studies have focused on economic outcomes, there's been growing recognition that social psychological measures, like satisfaction, are just as crucial.

Post-Negotiation Satisfaction and Future Interactions

Research by Novemsky and Schweitzer suggests that post-negotiation behaviors can profoundly impact future interactions between parties. For instance, actions after a negotiation can influence preferences for repeated interactions, commitment to a deal, or cooperation on issues not covered by the agreement. They theorize that “multiple conflict resolution episodes” link negotiation interactions over time, suggesting that social perceptions, such as outcome satisfaction, can predict future behavior.

Does the generation of options affect negotiator satisfaction? This chapter argues that it does, affirmatively.

Two Key Arguments of This Chapter

1. More Options Can Lead to Less Satisfaction and Regret: The more options on the negotiation table, the higher the risk of dissatisfaction and regret.

2. Psychological Value is as Important as Economic Gains: If negotiators do not achieve psychological satisfaction, feelings of regret may lead to renewed conflict.

Psychological Factors Influencing Negotiator Satisfaction

Negotiator satisfaction is a benchmark for judging negotiation outcomes. Satisfaction is influenced by psychological factors,130 and it is crucial in determining whether negotiators will follow through on an agreement or engage in future negotiations. At times, even with substantial economic gains, negotiators may feel uneasy. One reason is that choosing from multiple options can lead to less satisfaction.

Traditionally, negotiation theory suggests that multiple issues allow for "expanding the pie" through give-and-take trading. However, this is not the whole truth.133 When more options are available, negotiators are more likely to have counterfactual thoughts, imagining how outcomes might have been better, leading to reduced satisfaction.

Counterfactual Thinking: Imagining What Could Have Been

Counterfactual thoughts are imaginations of better or worse possible outcomes. When a negotiator selects an option but keeps thinking about “what could have been” if another option had been chosen, they experience counterfactual thoughts.

In one study by Charles Naquin involving graduate business students negotiating an employment package, those who negotiated more issues were less satisfied than those with fewer issues, despite achieving better outcomes. This finding suggests that more issues lead to more counterfactual thinking, reducing satisfaction.

Regret and the Forgone Options 

Another post-negotiation behavior related to the number of options is regret. Regret occurs when negotiators compare their actual outcome with what could have happened had they chosen differently. Negotiators who choose from multiple options are more likely to experience regret. Irons and Hepburn describe two kinds of regret: under-search regret (not searching enough for the best option) and over-search regret (settling on an inferior option).

Guthrie adds that unless the option generation process clearly identifies the best option, regret will likely follow. This suggests that decision regret is a predictable by-product of generating too many options.

Why do more options lead to less satisfaction and regret? Hafner, White, and Handley explain that choosing one option out of many involves giving up the opportunities the other options offer. This leads to perceived loss and regret. Decision-makers may also become attached to the options they consider, making the chosen option feel like a loss. This phenomenon, known as “option attachment,” increases dissatisfaction.

The Opportunity to Change Decisions Leads to Less Satisfaction

The more alternative options available, the more likely negotiators are to change their decisions. A study by Gilbert and Ebert showed that people who were allowed to change their decision after selecting a print were less satisfied than those who could not change their decision. This suggests that "opportunity breeds regret."

Conclusion: Simplifying the Choices for Better Satisfaction

In the end, having too many options forces negotiators to exert more effort and rely on second-hand information rather than personal experience. This leads to more mistakes and psychological consequences.151 While having more options may make the choice process more enjoyable, it can also reduce satisfaction and increase regret.

Options come with trade-offs, and each trade-off has psychological consequences. Schwartz explains that more options lead to more trade-offs, which affect satisfaction. Therefore, it may be wise to limit the number of negotiable issues to a manageable few. Simplicity can lead to faster, more accurate decisions.

 The key is to focus not only on economic outcomes but also on subjective outcomes like satisfaction, happiness, and success. While economic gains are important, agreements that lack party satisfaction tend to deteriorate over time.

By understanding the psychology of choice and option generation, negotiators can better balance both economic and psychological outcomes, ensuring more successful and satisfying negotiations.

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