Choice behavior is influenced by factors such as reward and number of alternatives but also by physical context, for instance, the relative position of alternative movement targets. At small separation, speeded eye or hand movements are more likely to land between targets (spatial averaging) than at larger separation. Neurocomputational models explain such behavior in terms of cortical activity being preshaped by the movement environment. Here, we manipulate target separation, as a determinant of motor cortical activity in choice behavior, to address neural mechanisms of response selection. Specifically, we investigate whether context-induced changes in the balance of cooperative and competitive interactions between competing groups of neurons are expressed in the power spectrum of sensorimotor rhythms. We recorded magnetoencephalography while participants were precued to two possible movement target locations at different angles of separation (30, 60, or 90 degrees ). After a delay, one of the locations was cued as the target for a joystick pointing movement. We found that late delay-period movement-preparatory activity increased more strongly for alternative targets at 30 than at 60 or 90 degrees of separation. This nonlinear pattern was evident in slow event-related fields as well as in beta- and low-gamma-band suppression. A comparable pattern was found within an earlier window for theta-band synchronization. We interpret the late delay effects in terms of increased movement-preparatory activity when there is greater overlap and hence less competition between groups of neurons encoding two response alternatives. Early delay-period theta-band synchronization may reflect covert response activation relevant to behavioral spatial averaging effects.