BATNA is a negotiating term which was coined by Roger Fisher and William Ury in their book “Getting to Yes,” (which I have previously blogged about).
What’s a BATNA?
Let’s start with the definition of BATNA. BATNA stands for Best Alternative to a Negotiated Agreement. BATNA is a term, It is a very important concept in negotiation theory and emphasizes the importance of having a strong, viable alternative when negotiating.
There are a number of reasons why understanding your BATNA is very important. When negotiating, parties often present proposals or concessions. By comparing these offers to your BATNA, you can better determine whether the terms are advantageous or not. It can also be useful for assessing any alternatives that might exist. A BATNA can also serve as a “walk away point,” helping negotiators decide when to continue discussions or not.
A strong BATNA can also enhance negotiating power. The challenge for those with weak alternatives is to attempt to improve their own BATNA or to weaken the opponent’s BATNA.
Negotiating power
Power is one of the factors that influences the way parties negotiate and the outcomes achieved. There is a considerable volume of academic literature concerning power and its role in negotiation.
Generally, negotiators with attractive BATNAs are powerful. It is also the case that negotiators who have more choice alternatives are also generally more powerful. There is a greater chance of matching preferences with alternatives. It can also be a powerful factor if a party has the ability to exit one negotiation and commence negotiation with a different party.
Power has both positive and negative effects on negotiations. It is well known that powerful people initiate negotiations and often move first in making the first offer. However, if both parties believe they have strong BATNA both may refuse to yield to the other. Hence, it has been said that “…lawsuits go to trial, labour strikes drag on, and ethnic warfare continues, even when agreements that would make both sides better off are feasible”.
Inequality of bargaining power
On the other side, when power imbalances exist, the BATNA becomes particularly important for the less powerful party. It sets the limits of what advantage can be taken. Power imbalances may also lead to rigidity on part of both parties. The only perceived source of power for the weaker party is to refuse to agree to anything. It may also lead to “ultimatum bargaining” which has been described as “the less powerful party might resent the sense of coercion or inequity inherent in the more powerful negotiator’s demands and refuse to yield, even knowing that this course of action will cause harm to both sides.”
Taken to its extreme, inequality of bargaining power may be the ‘single thread’ which runs through the common law doctrines of unconscionability, undue influence and duress. It is unclear whether this unifying thread is accepted as the jurisprudential basis in Australia. In any event that’s definitely a topic for further discussion at another time.
Creative commons acknowledgment for the photograph.