Do You Use “BATNA” Wrong?

If so, you have a lot of company.

Having reviewed negotiation publications and listened to colleagues, I can confidently assert that most of us grossly misuse the term “BATNA.”

This is one of my pet peeves, which drives me crazy – an admittedly short excursion.

I discussed this in my top-notch post, BATNA, MLATNA – No Big Difference, Right?, and I illustrated my point in a later post.

I refer you to those posts for a detailed explanation of the follies.

This post is to highlight some of the problems and encourage offenders to mend their ways.

First, let me review the main point, which is that the term has lost its meaning because people generally refer to the MOST LIKELY alternative to a negotiated agreement (MLATNA) when they use the term BEST alternative to a negotiated agreement (BATNA).

BATNAs are not the same as MLATNAs unless there is no uncertainty.  Theoretically, this can happen when someone is considering an option but would be quite content to continue the status quo.  For example, if Jane is satisfied with her job and gets another job offer, both the BEST and MOST LIKELY alternatives to accepting the offer would be that she stays in her job.  That’s an oversimplification, however, because things inevitably change, for example if Jane might get a great promotion or her company might go bankrupt.

In most legal disputes, there is considerable uncertainty.  Lawyers and parties discount their assessments of possible outcomes to reflect the risks, so MLATNAs therefore are always inferior to the BATNAs.

Consider the following hypothetical case.  A plaintiff’s lawyer believes that the absolute best possible result for his client is a $1 million net recovery and that the most likely net outcome at trial would be $100,000.  The lawyer would be a damn fool to urge rejection of a $500,000 net offer because it is less than $1 million.

Moreover, people often wrongly use the terms “BATNA” and “bottom line” (or “reservation price”) synonymously.  As mentioned above, people often use BATNA when they mean MLATNA.  But there also is a difference between a MLATNA and a bottom line.  In the preceding hypo, the MLATNA – the best estimate of the likely court outcome – is $100,000 but the plaintiff may be willing to accept as little as $50,000 (his bottom line) because of low risk tolerance, additional costs to go to trial, etc.

People often talk as if BATNAs (or, really, “bottom lines”) are fixed positions that people can set in advance and never change during negotiation.  Of course, this is balderdash.

People almost inevitably change their assessments as they learn more about the dispute and the other people’s perspectives.  Indeed, this routinely happens when people end up accepting less favorable terms than they planned when they started.

To get a more realistic understanding about how people actually do – and should – make decisions in negotiation, you need to focus less on BATNAs and bottom lines and more on decision tree analysis.  This incorporates considerations of multiple possible outcomes affected by various contingencies.

I understand that some people use “BATNA” as a kind of simple shorthand.

The problem is that it is a lousy, confusing shorthand that muddles people’s minds to misunderstand the reality of negotiation (and mediation etc.).

So I beseech you to stop using this term (inaccurately).

Come on, people.  We can do better.

3 thoughts on “Do You Use “BATNA” Wrong?”

  1. Today I chatted with a colleague who sheepishly admittedly that she sometimes uses “BATNA” as a shorthand. I replied that lots of people in our community do the same thing.

    I get the need to have a shorthand term for conversation. The problem is that BATNA is just a terrible choice.

    “Alternatives,” on the other hand, is a terrific, easy-to-use shorthand, which has the added virtue of reflecting reality quite well.

    For example, if someone gets an offer, you could say that she should consider the alternatives (to accepting the offer etc.). While considering the BEST alternative to a negotiated agreement can be helpful, usually people especially want to consider the MOST LIKELY and WORST alternatives to a negotiated agreement as well.

    You can do this. It’s not that hard.

  2. It seems to me that the primary distinction for a BATNA (as opposed to MLATNA) is exactly that there should be no uncertainty to it. In other words, the BATNA by definition should be entirely within the decision maker’s control. Proceeding with litigation is a viable BATNA, because it is a decision that can be fully within the control of the individual weighing his or her options. The most likely outcome from litigation is, of course, outside of his/her control. So, in determining whether you’re looking at a BATNA or a MLATNA, the best question to ask is “is this an option that is completely up to me to decide?” If yes, it is a BATNA, if no, MLATNA. Probably an oversimplification, but it might help people see the difference.
    As far as using BATNA as a shorthand, it seems to me that it is essentially the same as a more common shorthand expression: Plan B.

    1. Words (and our interpretation of them) get us in trouble, especially when they are constructs. We tend to attribute to them a meaning they might not have had when coined (in contexts that may not have been the ones in which we use them). You can see this in the simple, transactional examples often used to illustrate the BATNA concept in class (such as buying a car or considering a job offer), which lack depth and omit all the intricacies involved in arriving at BATNAs in other real, complex disputes.

      John’s critique applies best to the ways in which BATNA is often (wrongly) used and taught. I would like to redeem it by going back (40 years tops) to the meaning intended by its coiners.

      I suspect that the word “Best” is a trouble-maker.
      Despite its absolute connotation, it has a relative meaning. It does not mean “better than good” or “better than everything else”; and it could be really bad. Its initial meaning was not “one’s dream outcome” or “what one thinks one deserves” etc. (which is often what my students think of it) but rather the outcome of a serious, realistic, data-informed analysis (perhaps by means of a decision tree) of alternatives AND their likelihoods. (To see this, check for example the role descriptions of PON’s HarborCo role play, which illustrate well this kind of analysis.) Although BATNAs can still be wrong for many reasons (incomplete or incorrect information, faulty logic, wishful thinking with respect to likelihoods and so on) they are not meant to be naive, unrealistic or ignore likelihoods. Perhaps most importantly, they are not meant to be fixed and impervious to new information such as arises during negotiations. To the contrary, we are to update and improve our initial BATNAs as much as possible. The longer the duration of a negotiation, the more necessary and likely it becomes that BATNAs change. BATNAs are a source of leverage in negotiations so when they are really bad our leverage drops like a rock.

      As for the conflation of BATNAs with bottom lines or reservation prices, it stems from the need to define (quantitatively, though that’s not always possible especially with respect to relationships) the point at which the best offer on the table is worse than what one could obtain unilaterally or by negotiating with someone else (remember that not all negotiations happen in law suit contexts).

      Jeroen’s “plan B” (in the way I interpret it) is a good substitute for BATNA. It too has to be realistic, the result of a serious analysis of options and their livelihoods, and change in the face of new information. And it too can be really bad or undesirable, weakening us at the negotiation table.

      So John’s arguments against the ways in which the BATNA concept is misused are excellent. But we should not ditch it. We should go back to its initial meaning both in teaching and practice.

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