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.