Best Alternative to a Negotiated Agreement

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In negotiation theory, the best alternative to a negotiated agreement or BATNA is the course of action that will be taken by a party if the current 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.[citation needed] Most managers overestimate their BATNA whilst simultaneously investing too little time into researching their real options.[citation needed] 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.[2] 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 a game theory concept pioneered by Nobel Laureate John Forbes Nash decades earlier in his early undergraduate research.[citation needed] Contents [hide]

1 Definitions
2 Examples
2.1 Selling a car
2.2 Purchasing
3 See also
4 References
5 External links
[edit]Definitions

BATNA
An acronym defined by negotiation researches Roger Fisher and William Ury which means Best Alternative to a Negotiated Agreement.[3] It is the alternative action that will be taken if your proposed agreement with another party result in an unsatisfactory agreement or when an agreement cannot be reached. Historical Theories

The Nash Equilibrium as developed by John Forbes Nash, the father of Game Theory, is described in Getting to YES[3] as the underlying idea for the concept of BATNA in negotiation (Roger B. Myerson, April 1996).[4] In a nutshell, Nash Equilibrium theory explains that, if in a group of players, each player has in consideration the other player’s decisions, then no one will benefit from altering their decisions, if the other players haven’t either.[5] Example of Nash Equilibrium Theory

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. We cannot think of BATNA without first understanding the notion of negotiation. Negotiation has been part of the “business” mentality of human beings as we know it, since the beginning of mankind. Take for example the Israeli-Palestinian conflict, one of the longest ongoing negotiations of the kind, based primarily on the dispute over land (UN, 1948). We negotiate every single day of our lives; whether it is goods, commodities, ideas, positions, or money. The list could be endless. For this reason knowing how to negotiate is very important. The idea is to have all parties mutually satisfied with the results achieved through the highest standards of (Ethics) and legitimate...
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