Psychology of Negotiation: Part II – Less Is More

The Surprising Truth About Option Generation in Negotiation

Negotiation is, at its core, about making decisions. Before reaching any decision, parties often spend time exploring all possible options. These “options” are different ways to reach an agreement or resolve a conflict. While generating options is a crucial step in decision-making and problem-solving, it has received surprisingly little attention in negotiation literature. Although it is frequently praised as indispensable in conflict resolution, many still consider it “not a well-understood phenomenon.” Research has primarily focused on evaluating and selecting options, rather than on how those options are generated in the first place.

What Is Option Generation?

Option generation is the process of creating new and creative courses of action. It involves effort and creativity, such as recognizing a strategy that worked in another context and adapting it to the current situation. Roger Fisher and William Ury, pioneers in negotiation theory, describe this process as “inventing options for mutual gain.” Others refer to it as “expanding the pie.”

However, generating options is not simply about producing more choices. It can also involve identifying which strategies are most effective in achieving the best outcomes.

The Dark Side of Generating Too Many Options

While negotiation literature often encourages brainstorming alternative solutions, generating too many options can lead to poorer decisions. This chapter argues that there is a negative relationship between the number of options and the quality of choice: in many cases, less is more. Rather than aiming to produce as many options as possible, it is often better to limit the search. Real-world decision-makers have finite time, knowledge, and cognitive resources to devote to any given decision.

Models of Intuitive Decision-Making: Why Fewer Options Work Better

Several decision-making models illustrate why generating fewer options can be more effective.

1. Recognition-Primed Decision Model
   Developed by Gary Klein, this model shows how experienced decision-makers rely on knowledge and experience to quickly identify acceptable actions. They often proceed with the first option they generate because it is usually satisfactory, eliminating the need to consider multiple alternatives.

2. Take the First Heuristic
   Developed by Joseph Johnson and Markus Raab, this model suggests that the first generated option is often among the best. Take the First “utilizes the principles of associative memory networks in conjunction with the rules of fast and frugal heuristics.” It predicts human behavior and often results in high-quality choices. The model proposes that generating fewer options may be more effective than generating many, and that the earliest options generated are frequently the strongest.

3. Long-Term Working Memory Model
   Similar to the models above, this framework suggests that experts tend to generate fewer options. However, it differs in that the best option may not necessarily be the first one generated, but may emerge later among a small set of possibilities.

4. Bounded Rationality
   Introduced by Herbert Simon, this theory proposes that decision-makers operate within the limits of their knowledge, time, and cognitive resources. Rather than seeking the optimal solution, individuals often choose a “satisficing” option—one that is sufficiently good under the circumstances.

The Pitfalls of Extensive Option Generation

Empirical studies suggest that generating too many options can lead to decision fatigue and confusion. Experiments involving handball players and chess players, for example, found that the most skilled participants generated fewer options and made decisions more decisively. As the number of options increased, the quality of decisions tended to decline.

How Much Is Too Much?

Determining how many options are “too many” is not straightforward. Research by psychologists Sheena Iyengar and Mark Lepper on choice overload suggests that the ideal number of options varies depending on the decision-maker’s experience and the complexity of the decision. When negotiators perceive their choices as limited and manageable, they tend to feel more comfortable and make better decisions.

Conclusion: The Power of Less

Fewer options can lead to better decisions. Rather than brainstorming as many possibilities as possible, negotiators may benefit from focusing on generating a small number of high-quality options or strategically identifying a strong option early in the process. This counterintuitive approach challenges traditional negotiation practices, but it offers the promise of more efficient and effective decision-making.

REFERENCES

1. Ury, Roger, and William Fisher. Getting to Yes: Negotiating Agreement Without Giving In. Penguin Books, 1981.

2. Klein, Gary A., et al. "Characteristics of Skilled Option Generation in Chess." Organizational Behavior and Human Decision Processes, vol. 62, no. 1, 1995, pp. 63-69.

3. Johnson, Joseph G., and Markus Raab. "Take the First: Option-Generation and Resulting Choices." Organizational Behavior and Human Decision Processes, vol. 91, no. 2, 2003, pp. 215-229.

4. Klein, Gary, and Steve Wolf. "The Role of Leverage Points in Option Generation." IEEE Transactions on Systems, Man, and Cybernetics, Part C: Applications and Reviews, vol. 28, no. 1, 1998, pp. 157-160.

5. Guthrie, Chris. "Option Generation: Be Careful What You Ask For." The Handbook of Dispute Resolution, edited by Michael L. Moffitt and Robert C. Bordone, Jossey-Bass, 2005, pp. 219-32.

6. Naquin, Charles E. "The Agony of Opportunity in Negotiation: Number of Negotiable Issues, Counterfactual Thinking, and Feelings of Satisfaction." Organizational Behavior and Human Decision Processes, vol. 91, no. 1, 2003, pp. 97-107.

7. Lum, Grande, Irma Tyler-Wood, and John Anthony Wanis-St. Expand the Pie: How to Add Value to Any Negotiation. Castle Pacific Publishing, 2003. See also Basadur, Min, et al. "Collaborative Problem Solving Through Creativity in Problem Definition: Expanding the Pie." Creativity and Innovation Management, vol. 9, no. 1, 2000, pp. 54-76; Jap, Sandy D. "Pie-Expansion Efforts: Collaboration Processes in Buyer-Supplier Relationships." Journal of Marketing Research, 1999, pp. 461-475.

8. Adelman, Leonard, James Gualtieri, and Suzanne Stanford. "Examining the Effect of Causal Focus on the Option Generation Process: An Experiment Using Protocol Analysis." Organizational Behavior and Human Decision Processes, vol. 61, no. 1, 1995, pp. 54-66.

9. Irons, Ben, and Cameron Hepburn. "Regret Theory and the Tyranny of Choice." Economic Record, vol. 83, no. 261, 2007, pp. 191-203.

10. Gigerenzer, Gerd, and Peter M. Todd. "Fast and Frugal Heuristics." Simple Heuristics That Make Us Smart, Oxford UP, 1999, pp. 3-33.

11. Ward, Paul, K. Anders Ericsson, and A. Mark Williams. "Complex Perceptual-Cognitive Expertise in a Simulated Task Environment." Journal of Cognitive Engineering and Decision Making, 2012.

12. Klein, Gary A. "A Recognition-Primed Decision (RPD) Model of Rapid Decision Making." Decision Making in Action: Models and Methods, 1993, pp. 138-147.

13. Raab, Markus, and Joseph G. Johnson. "Expertise-Based Differences in Search and Option-Generation Strategies." Journal of Experimental Psychology: Applied, vol. 13, no. 3, 2007, p. 158.

14. Ericsson, K. Anders, and Walter Kintsch. "Long-Term Working Memory." Psychological Review, vol. 102, no. 2, 1995, p. 211.

15. Ward, Paul, et al. "Option Generation and Decision Making in Critical-Care Nursing." Proceedings of the Human Factors and Ergonomics Society Annual Meeting, vol. 54, no. 4, SAGE Publications, 2010.

16. Newell, Ben R., and David R. Shanks. "Take the Best or Look at the Rest? Factors Influencing ‘One-Reason’ Decision Making." Journal of Experimental Psychology: Learning, Memory, and Cognition, vol. 29, no. 1, 2003, p. 53.

17. Simon, Herbert A. Models of Bounded Rationality. MIT Press, 1982.

18. Winter, Sidney G. "The Satisficing Principle in Capability Learning." Strategic Management Journal, vol. 21, no. 10-11, 2000, pp. 981-996.

19. Gigerenzer, Gerd, and Daniel G. Goldstein. "Betting on One Good Reason: The Take the Best Heuristic." Simple Heuristics That Make Us Smart, Oxford UP, 1999, pp. 75-95.

20. Elster, Jon. Ulysses and the Sirens: Studies in Rationality and Irrationality. Cambridge UP, 1979. Cited in Gigerenzer & Todd, Simple Heuristics That Make Us Smart, 1999.

21. Iyengar, Sheena S., and Mark R. Lepper. "When Choice is Demotivating: Can One Desire Too Much of a Good Thing?" Journal of Personality and Social Psychology, vol. 79, no. 6, 2000, p. 995.

22. Iyengar, Sheena S., Gur Huberman, and Wei Jiang. "How Much Choice is Too Much? Contributions to 401(k) Retirement Plans." Pension Design and Structure: New Lessons from Behavioral Finance, 2004, pp. 83-95.

23. Gigerenzer, Gerd, and Reinhard Selten, eds. Bounded Rationality: The Adaptive Toolbox. MIT Press, 2002.