Best Alternative to a Negotiated Agreement (BATNA)

In negotiation theory, the Best Alternative to a Negotiated Agreement or BATNA is the choice of action that will be taken by a party if the current negotiations break down and an agreement cannot be reached. BATNA is a critical process and the guiding principle for a successful negotiator. A party should generally not accept an inferior resolution than its BATNA. It is imperative that caution is exercised to make sure that the deals are given their correct value, taking into account all considerations, such as relationship value, time value of money and the probability that the other party will keep up to their side of the bargain. It is often difficult to place value on the other considerations. As they are usually based on tentative or qualitative considerations, as opposed to easily quantifiable and scientific factors.

The BATNA is often conceived by negotiators not as a safety net, but rather as an asset in negotiations. Even though a negotiator’s alternative options should, in practice, be easy to evaluate, the attempt to understand which alternative symbolizes a party’s BATNA is often not invested. Alternatives need to be genuine and actionable to be of importance, On the other hand without the investment of time, alternatives will usually be included that fails on one of these criteria. A lot of the time, managers overrate their BATNA while concurrently investing too little time into investigating their real options. The consequences of this are poor or faulty decision making and negotiating outcomes. Negotiators also need to be knowledgeable of the other negotiator’s BATNA and to recognize how it measure up to what they are offering.

BATNA was developed by negotiation researchers Roger Fisher and William Ury of the Harvard Program on Negotiation (PON), in their series of books on Principled negotiation that started with Getting to YES, unsuspectingly reproduced the game theory concept of a disagreement point from bargaining problems pioneered by Nobel Laureate John Forbes Nash decades earlier. A Nash Equilibrium is reached among a group of players with a choice of strategies, when no player can benefit from changing strategies if every other player sticks to their current strategy. For example, Amy and Phil are in Nash Equilibrium if Amy is making the best decision she can, taking into account Phil’s decision, and Phil is making the best decision he can, taking into account Amy’s decision. Likewise, a group of players are in Nash Equilibrium if each one is making the best decision that he or she can, taking into account the decisions of the others.

A brutal, aggressive and to the point negotiation style is the framework approach most people have when it comes to negotiation, a theoretical example of that is Adversarial Approach Style Negotiation. But in practice, as mentioned by experts and researchers such as Fisher and Ury. It doesn’t always have to be this way. As the world moves to more refined platforms of communication, negotiation trails the trend and Problem-Solving Approach is in a way, the “antidote” of Adversarial Approach Style Negotiation. Getting to YES suggests an Interest-Based Model for the use of Problem-Solving Approach. Interest-Based Model centers on separating the person (positional) from the problems (resolution) and then concentrates on the resolution. This lets each party achieve its goals in a distributive way.

Attractive Alternatives is essential to develop a very strong BATNA. In Getting to YES, the authors give 3 suggestions of how you this can be achieved

• Inventing a list of actions you might take if no agreement is reached
• Converting some of the more promising ideas and transforming them into tangible and partial alternatives
• Selecting the alternative that sounds best

BATNA rules

A BATNA is not disclosed unless it’s beneficial. In negotiations involving cross cultural exchange, all parties need to take into consideration for cultural cognitive behaviors and not permit judgments and biases to affect the negotiation. The individual should be removed from the objective.

The purpose here, as Gulliver mentions, is for negotiation parties to be aware. Preparation at all levels, including prejudice-free thoughts, emotion-free behavior, bias-free behavior are helpful according to Morris and Gelfand.