[author: Joe Murphey]
Freedom of Choice. It’s the cornerstone of liberty, an “inalienable right”, and the title of a catchy tune by ‘80s pop band Devo. But is there such a thing as too many choices? And, if so, how does that impact negotiation and dispute resolution – where freedom to choose is the coin of the realm. Let’s examine the effect of option overload on decision-makers.
In his 1970 book Future Shock, futurist and author Alvin Toffler coined the phrase “overchoice” — a phenomenon where decision-making becomes impaired, or overwhelmed, as the number of options increases. Having zero choices is, of course, bad and thus results in a negative experience for a decision-maker. As the number of options increases, so too does the positive experience of the decision-maker. But at a point, satisfaction rapidly craters as more and more options are added. The bottom line: People want options, but not too many.
Toffler was researching, and writing, more than 50 years ago – well before the information overload that pervades our world today. In 1970, there were three channels on TV, only one phone company to choose from, and only one flavor of Doritos (today there are at least 17).
Toffler was on the cutting edge of something even more relevant today as we encounter virtually limitless options for every decision we face, large or small. Somehow, we manage to get in and out of the grocery store without having a mental breakdown in the snack aisle. (BTW: Of the 17 varieties of Doritos, Spicy Sweet Chili is the undisputed champion.) But what about really important decisions with long-lasting, sometimes life-changing, implications – like the decisions parties and counsel make in a mediation. For those of us who are professional negotiators – lawyers and mediators helping clients navigate through myriad choices to resolve disputes – how can we use our knowledge of the paradox of “overchoice” to our advantage. I suggest that you consider The Goldilocks Rule.
Goldilocks (that beloved home invader from the childhood bedtime story) was faced with three choices, and she made the best of it. Meaningful negotiation can only occur when there are options; And, I submit, that means more than two, but (as Goldilocks teaches us) maybe not more than three.
But let’s first examine the pros and cons of the two-choice scenario. I remember, in the kitchen of a friend’s house growing up a framed cross-stitch that stated – “You Have Two Choices for Dinner: Take It or Leave It. -Mom”. Binary choices all have that “take it or leave it” sheen to them. Our two-party political system leaves many people feeling voiceless, longing for a meaningful third-party option. I submit that three choices are optimal for many purposes. Between two extremes often lies that momma-bear porridge that’s “just right”. Let’s explore what this might look like in a real mediation/negotiation setting.
The plaintiff in a mediation over a contract dispute has, after a few hours of slow-moving negotiations, decided she is willing to forgo loss of profits if the defendant will cover her opportunity costs incurred in complying with the contract, along with half of her attorney’s fees for having to file suit. This is a huge breakthrough, as she was previously unwilling to accept anything less than full damages and attorney’s fees, along with punitive damages for fraud and tortious breach. She asks you, the mediator, how to best move to this moderated position.
Scenario 1: Plaintiff presents her position as “bottom line, take it or leave it.” Blunt, candid, what-you-see-is-what-you-get offers do have a time and place. But to the Defendant, this will probably have the same effect as the “two choices for dinner” option.
Scenario 2: Plaintiff continues to move slowly from her current position, reducing her demands gradually until they begin to have some effect on the defense, never really stating, or even hinting, at a bottom line.
Scenario 3: Plaintiff offers three “options” for resolution. Since she has several categories of damages — expenses, lost profits, attorney fees and punitive damages – Plaintiff can get creative. She could make an incremental move (like scenario 2 above) and offer along with it two more options in the alternative: (1) Drop the punitive damages and attorney fees if Defendant will pay actual damages; (2) Reduce the actual damages even further if Defendant will commit to a future no-bid contract with Plaintiff.
Here’s another example of giving a decision-maker three options: Plaintiff seeks to have his mediation costs paid by the Defendant. He might simply say, “Here’s my demand, and pay the mediator.” Or, he may never mention the mediation costs and simply budget them into the demand structure. A good opportunity is being missed if he doesn’t offer the defendant the option of either paying the mediation costs or increasing the offer by a similar amount, giving the defense three options – two ways to say “yes” versus only one to say “no”.
The bottom line is this: At any phase of negotiations, messages can almost always be presented in threes. The simplest is the Goldilocks “hot, cold and just right” trio. And there are many others. But you may still ask: If three options are good, why aren’t five better? Or seven even better yet? Back to the first example above (the breach of contract). What would be the effect of plaintiff demanding: “All damages and no attorney fees, OR partial damages and all attorney fees, OR partial damages and a work-out arrangement, OR partial damages, partial attorney fees, and two future no-bid contracts, OR no damages but a 10% share in your company, OR …? You get the picture. At some point, there are so many different options that the defendant just vapor-locks and can’t process any of them. If three isn’t the magic number for presenting options, it’s at least the template you may consider as a starting point in your analysis.
In summary, having agency in the outcome is a pillar for all meaningful negotiation. But if the decision involves anything more significant than picking the right flavor corn chip, more is less when it comes to the variety of choices to pick from in getting to a settlement.
Consider these final three options: You may accept what I have written here as true, you may reject it altogether, or you may consider it food for thought in reaching your own conclusions. But under no circumstances will I concede the supremacy of Spicy Sweet Chili Doritos.