// definition
Outside option
Fallback alternative in a negotiation
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Short definition
An alternative available if a relationship or negotiation ends. For a worker, it depends on accessible jobs and the conditions for obtaining them; for a firm, on replacement or reorganisation options. Its influence on the division of gains depends on how workable the alternatives are and on the bargaining setting.
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Knowledge map
Related analyses
Primary sources
- CORE, The Economy, Unit 6The value of a job compared with the next best alternative, including job search.
- Fukui, Nakamura and Steinsson, The Commoditization of LaborIntroduction: firm and worker outside options under the model’s assumptions.