Alternatives vs. Time – Measuring the Force of Distinct Sources of Bargaining Power

Abstract

This study aims to deepen the understanding of the drivers of bargaining power in negotiations and in particular the role of best alternatives (BATNA) and time pressure. Previous experimental negotiation research mainly focused on the power of BATNA and the influence of the context on the negotiation outcome, raising the question as to whether BATNA is indeed the only relevant power lever in negotiations. Especially game theorists have shown that time-related costs have a decisive influence on negotiation outcomes. The study proposes a framework to actually measure and compare the relevance and force of different power levers in a simulated distributive buyer-seller negotiation. The results suggest that time pressure can be as influential as an alternative; however, students and professionals seem to react differently to power manipulations. Whereas the student sample was significantly influenced by time pressure but not by alternatives, the opposite could be observed in the professional group. The findings question the common belief that alternatives are the key driver of power in negotiations.