Best alternative to a negotiated agreement

In negotiation theory, the Best Alternative to a Negotiated Agreement or BATNA is the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached. BATNA is the key focus and the driving force behind a successful negotiator. A party should generally not accept a worse resolution than its BATNA. Care should be taken, however, to ensure that deals are accurately valued, taking into account all considerations, such as relationship value, time value of money and the likelihood that the other party will live up to their side of the bargain. These other considerations are often difficult to value, since they are frequently based on uncertain or qualitative considerations, rather than easily measurable and quantifiable factors.

The BATNA is often seen by negotiators not as a safety net, but rather as a point of leverage in negotiations. Although a negotiator's alternative options should, in theory, be straightforward to evaluate, the effort to understand which alternative represents a party's BATNA is often not invested. Options need to be real and actionable to be of value,[1] however without the investment of time, options will frequently be included that fail on one of these criteria.[2] Most managers overestimate their BATNA whilst simultaneously investing too little time into researching their real options. This can result in poor or faulty decision making and negotiating outcomes. Negotiatiors also need to be aware of the other negotiator's BATNA and to identify how it compares to what they are offering.[3]

Some people adopt a ruthless, aggressive and cold-blooded negotiation style;[4] a theoretical example of this is adversarial approach style negotiation.[4] However, as mentioned by Fisher and Ury [5] it doesn’t have to be that way. As the world moves to more sophisticated platforms of communication, the problem-solving approach is the antidote to the adversarial approach. Getting to YES[5] suggests an interest-based model focusing on separating the person (positional) from the problems (known as resolution), and then concentrate on the resolution. This lets each party attain its goals distributively.

Attractive alternatives are needed to develop a strong BATNA. In Getting to YES, the authors give 3 suggestions of how to accomplish this:

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

In negotiations involving different cultures, all parties need to account for cultural cognitive behaviors and should not let judgments and biases affect the negotiation. The individual should be separate from the objective.[5]

The purpose here, as Gulliver mentions, is for negotiation parties to be aware.[6]

Preparation at all levels, including prejudice-free thoughts, emotion-free behavior, bias-free behavior are helpful according to Morris and Gelfand.[7]

History

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, unwittingly duplicating the game theory concept of a disagreement point from bargaining problems pioneered by Nobel Laureate John Forbes Nash decades earlier.[5][8] A Nash Equilibrium is reached among a group of players when no player can benefit from changing strategies if every other player sticks to their current strategy.[9] 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.

Examples

Selling a car

If the seller of a car has a written offer from a dealership to buy the seller's car for $1,000, then the seller's BATNA when dealing with other potential purchasers would be $1,000 since the seller can get $1,000 for the car even without reaching an agreement with an alternative purchaser.

In this example, other offers that illustrate the difficulty of valuing qualitative factors might include:

See also

References

  1. ↑ Best Alternative to a Negotiated Agreement | Negotiation Experts
  2. ↑ Best Alternative to a Negotiated Agreement | YArooms
  3. ↑ Negotiation, Readings, Exercises and Cases, Roy J. Lewicki
  4. 1 2 Nolan-Haley, Jaqueline M (2001). Alternative Dispute Resolution in a Nutshell. Thomson West. pp. 39–50. ISBN 978-0-314-18014-8.
  5. 1 2 3 4 Fisher and Ury, Roger and William (2011). Getting to YES. Penguin Books. pp. 1–170. ISBN 978-0-14-311875-6.
  6. ↑ Gulliver, P.H (1979). Disputes and Negotiation: A Cross Culture Perspective. Academic Press. p. 287.
  7. ↑ Morris, Michael W.; Gelfand, Michele J. (2004). "Cultural Differences and Cognitive Dynamics: Expanding the Cognitive Perspective on Negotiation". In Gelfand, Michele J.; Brett, Jeanne M. The Handbook of Negotiation and Culture. Stanford University Press. pp. 45–70. ISBN 978-0-8047-4586-4.
  8. ↑ Myerson, Roger B. "Nash Equilibrium and the History of Economic Theory" (PDF). Nash Equilibrium and the History of Economic Theory. Journal of Economic Literature. Retrieved 1 October 2012.
  9. ↑ Hawkins and Steiner, Jeff and Neil. "The Nash Equilibrium Meets Batna" (PDF). Gamed Therory Varied Uses in ADR. Harvard University Press. Archived from the original (PDF) on February 28, 2013. Retrieved 1 October 2012.

External links

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