What if our BATNA is not at all clear?

Published July 8th, 2008 by Hal Movius

Parties often cannot predict what will happen if they walk away from the negotiating table; there is no clear “second choice” that awaits.  This can be due to changing market conditions, uncertainty around the viability of technologies, volatile or uncertain relationships, or lack of knowledge.  Parties can - and should - estimate a BATNA by taking a range of outcomes into account, estimating the likelihood of each.  By averaging the weighted sum of the alternative outcome values (multiplied by their singular probabilities), parties can derive a single “reservation price” that reflects an estimate of their overall BATNA.  (It is worth noting, that parties often focus too much on the Worst alternative (WATNA) and react by conceding too much at the table.  When their WATNA is quite unlikely, this is a poor strategy.)

Syndicate content